The Federal Reserve’s Federal Open Market Committee (FOMC) made a widely expected decision on Thursday to lower the federal funds rate by a quarter-point, bringing it to a target range of 4.50% to 4.75%. The unanimous vote follows Michelle Bowman’s dissent at the September meeting.
According to the statement released, the committee will continue monitoring economic data and is prepared to adjust monetary policy as needed. Minor updates were provided in regards to labor market conditions, with officials noting that they have generally eased compared to their previous statement which stated employment gains had slowed.
This quarter-point reduction comes after a significant 50 basis point decrease at their last meeting in September. However, policymakers have emphasized that such large cuts should not be expected regularly and instead indicated that any future easing would be gradual.
Unlike previous meetings where an update was given on its Summary of Economic Projections (SEP), this one did not include any new information as it will be updated in December.
All eyes are now on Fed Chair Jerome Powell’s press conference where analysts anticipate similar language from the September meeting. Bryan Jordan from Cycle Framework Insights Inc., predicts little change in today’s FOMC statement due ongoing uncertainties surrounding growth and inflation.
However, he believes Powell could provide some support for Treasury markets if he maintains his dovish tone from seven weeks ago during his press conference: “Powell’s press conference could potentially boost confidence among investors who may see an unchanged policy stance at next month’s FOMC meeting.”
Currently, markets are pricing another quarter-point rate cut for December followed by no changes until January when there may be up tp100 basis points worth of cuts throughout 2025 according Jordan.
