The Fed resumed interest rate cuts after a nine-month hiatus, cutting the federal funding rate by 25 basis points, down from 4% to 4.25%.
According to the “dot plot” forecasts reflected in the decision text, two additional interest rate reductions are expected in 2025.
Nine out of 19 employees had anticipated two more interest rate cuts this year, but two predicted a single cut and six did not predict additional cuts.
Stephen I. Miran, a newly appointed member of the Federal Reserve Committee, opposed the decision and voted for a stronger 50 basis point cut.
The decision noted that economic growth slowed in the first half of the year, slowing employment growth and slight rise in unemployment. He also noted that inflation began to rise but remained high.
Repeated to maintain its long-term target of maximum employment and 2% inflation, the Fed noted that uncertainty about the economic outlook remains high. The statement reads, “The committee evaluates the downsides to employment as increased along the balance of risk.”
The statement said interest rate policy will be restructured over the coming period, taking into account future data, economic outlook and risk balances. He also noted that the amount of holdings of Ministry of Finance’s debt, corporate debt certificates and mortgage-backed securities will continue to be reduced.
The resolution was supported by Federal Reserve Chairman Jerome Powell, Vice-Chairman John C. Williams, and board members Michael S. Barr, Michelle W. Bowman, Susan M. Collins, Lisa D. Cook, Austan D. Goolsby, Philip N. Jefferson, Albert G. Musalem, Jeffrey R. Schmid and Cristop J. Waller.
*This is not investment advice.
