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The Federal Reserve has announced a 50-basis-point cut in the federal funds rate, lowering the target range to 4.75%–5%. The decision comes as recent indicators suggest that the U.S. economy continues to expand at a solid pace, despite slowing job gains and a slight uptick in the unemployment rate, which remains low.
Inflation has made notable progress toward the Fed’s 2% target, although it remains somewhat elevated. The Federal Open Market Committee (FOMC) expressed increased confidence that inflation is moving sustainably toward this objective, with the risks to achieving their employment and inflation goals now viewed as roughly balanced.
In its statement, the Committee highlighted the uncertain economic outlook and emphasized its commitment to closely monitoring incoming data, particularly labor market conditions, inflation expectations, and international developments. The Fed also reiterated its plan to continue reducing its holdings of Treasury securities and agency mortgage-backed securities as part of its broader policy strategy.
The Committee’s decision received broad support, with Chair Jerome Powell and Vice Chair John C. Williams among those voting in favor. However, Michelle W. Bowman dissented, preferring a more modest 25-basis-point rate cut.
Looking forward, the Fed indicated it will carefully assess the evolving economic landscape before making further adjustments to the target range, signaling a data-driven approach to future policy decisions.