Source: Jin10

On Thursday, October 30, the Federal Reserve lowered the benchmark interest rate by 25 basis points to 3.75%-4.00%, marking the second consecutive meeting of rate cuts, in line with market expectations. Two committee members voted against, indicating a growing divide. Among them, Kansas City Fed President Esther George opposed the rate cut and supported keeping rates unchanged; Governor Stephen Miran disagreed with this rate decision, believing a 50 basis point cut should be implemented.

Additionally, the Federal Reserve's FOMC statement announced that it will end the reduction of its balance sheet on December 1, currently reducing its holdings by $5 billion in U.S. Treasuries and $35 billion in MBS each month. After that, the principal repayments from mortgage-backed securities will be reinvested in short-term government bonds.

Full Text of the Rate Decision

Available indicators show that economic activity is expanding at a moderate pace. Job growth has slowed this year, and the unemployment rate has slightly increased, but it remains at a low level as of August; more recent indicators are consistent with this trend. Inflation has risen since the beginning of the year and remains at relatively high levels.

The committee's goal is to achieve maximum employment and a long-term inflation rate of 2%. Uncertainty regarding the economic outlook remains high. The committee is closely monitoring the risks associated with its dual mandate and believes that the downside risks to employment have increased in recent months.

To support the aforementioned goals and considering the changes in risk balance, the committee decided to lower the target range for the federal funds rate by 25 basis points to 3.75% to 4%. In considering further adjustments to the target range for the federal funds rate, the committee will carefully assess the latest data, changes in the economic outlook, and the balance of risks. The committee also decided to end the reduction of its total securities holdings starting December 1. The committee is firmly committed to supporting maximum employment and pushing inflation back to the 2% target level.

In assessing the appropriate stance of monetary policy, the committee will continue to monitor how new information affects the economic outlook. If risks emerge that could impede the achievement of the committee's goals, the committee will adjust its monetary policy stance as appropriate. The committee's assessment will take into account a wide range of information, including labor market conditions, inflation pressures and expectations, as well as the latest developments in financial and international markets.

Members voting in support of this monetary policy action include Chair Jerome H. Powell, Vice Chair John C. Williams, Michael S. Barr, Michelle W. Bowman, Susan M. Collins, Lisa D. Cook, Austan D. Goolsbee, Philip N. Jefferson, Alberto G. Musalem, and Christopher J. Waller.

Members voting against were Stephen I. Miran, who favored a half-point reduction in the federal funds rate target range at this meeting, and Jeffrey R. Schmid, who preferred to keep the rate range unchanged at this meeting.

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