The US Federal Reserve has cut rates once again following a 50 basis point cut in September. Today, the Fed reduced benchmark rates by 25 bps.
In the FOMC [Federal Open Market Committee] statement, it was noted that inflation has “made progress” towards its 2% rate target but core remains “somewhat” elevated. In September, inflation stood at 2.1%. GDP rose around 2.8% in the 3rd quarter. The labor market is said not to be a significant element pushing inflation higher.
The FOMC aims to hold inflation to 2% while achieving full employment.
The Committee unanimously decided to lower rates, matching market expectations.
The FOMC also indicated that it would continue to reduce its holdings of US Treasuries, shrinking its balance sheet while assessing incoming data. This strategy aims to balance risk while achieving its goals.
The rate cut follows the Bank of England cut of 25 bps earlier today.
Fed Chairman Jerome Powell will hold a press conference on the decision at 2:30 PM today.