Full text of the Federal Reserve’s decision: 25 basis point rate cut and announcement of balance sheet reduction;

On Thursday, October 30, the Federal Reserve cut its benchmark interest rate by 25 basis points to 3.75%-4.00%, marking the second consecutive rate cut at its meeting, in line with market expectations. Two members voted against the cut, indicating growing disagreement. Kansas City Fed President Schmid opposed the rate cut, supporting maintaining the current rate; Governor Milan opposed the decision, believing a 50 basis point cut was warranted.

In addition, the Federal Reserve’s FOMC statement announced that it will end its balance sheet reduction on December 1st, currently reducing its holdings of Treasury securities by $5 billion and mortgage-backed securities by $35 billion per month. After that, the principal from the redemption of mortgage-backed securities will be reinvested in short-term Treasury securities.

Full text of the interest 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 risen slightly, but remained low as of August; more recent indicators are consistent with this trend. Inflation has risen since the beginning of the year but remains relatively high.

The Committee’s objectives are to achieve maximum employment and a long-term inflation rate of 2 percent. Uncertainty surrounding the economic outlook remains high. The Committee closely monitors the risks to both sides of its dual mandate and considers downside risks to employment to have increased in recent months.

To support these objectives and taking into account changes in the balance of risks, 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 recent data, changes in the economic outlook, and the balance of risks. The Committee also decided to end the reduction in its total securities holdings, effective December 1. The Committee remains firmly committed to supporting maximum employment and pushing inflation back to its 2 percent objective.

In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of emerging information for the economic outlook. If risks arise that could hinder the achievement of the Committee’s objectives, the Committee will adjust the stance of monetary policy as appropriate. The Committee’s assessment will take into account a wide range of information, including labor market conditions, inflation pressures and inflation expectations, as well as updates on financial and international developments.

The members who voted in favor of this monetary policy action included Chairman Jerome H. Powell, Vice Chairs 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.

The members who voted against it were Stephen I. Miran, who favored lowering the target range for the federal funds rate by half a percentage point at this meeting, and Jeffrey R. Schmid, who favored keeping the rate range unchanged at this meeting.

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