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The U.S. Federal Reserve concluded its two-day monetary policy meeting on the 10th, announcing the lowering of the federal funds rate target range to 3.5% to 3.75%, in line with market expectations.
This is the Fed’s third consecutive rate cut since September and the sixth rate cut since the start of this round of easing cycle in September 2024.
The Federal Open Market Committee said in a post-meeting statement that while U.S. economic activity is expanding moderately, job growth has slowed, the unemployment rate rose in September, inflation remains somewhat elevated, and the economic outlook still faces considerable uncertainty, with downside risks in the labor market increasing over recent months.
The most notable aspect of this Fed rate decision is that among the 12 committee members, 9 supported the 25 basis point rate cut, while 3 opposed. Of those, 2 believed the benchmark rate should remain unchanged, and 1 believed the rate cut should be expanded to 50 basis points. This is the highest number of dissenting votes since the September 2019 meeting, highlighting current divisions within the Fed.
When the Fed decided to cut rates by 25 basis points in October, 2 members of the Open Market Committee opposed.
In a statement, the Fed said that in considering the magnitude and timing of further adjustments to the federal funds rate range, the Open Market Committee will carefully assess new data, changes in the outlook, and the overall balance of risks. In addition, the Fed will launch purchases of short-term Treasuries as needed, to provide adequate liquidity to the market.
Fed Chair Powell stated that the federal funds rate is now within the neutral range and there is room to further observe changes in the economic situation.
He believes that the inflation exceeding the Fed's target is mainly caused by tariffs imposed by the U.S. government.