The US Federal Reserve’s open market committee voted 8-2 this morning to cut its federal funds rate target range by another 25 basis points to 1.5-1.75%.
Today’s cut follows 25-point cuts on 18 September & 31 July.
In today’s release, Fed chair Jerome Powell said:
Information received since the Federal open market committee met in September indicates that the labour market remains strong and that economic activity has been rising at a moderate rate. Job gains have been solid, on average, in recent months, and the unemployment rate has remained low.
“Although household spending has been rising at a strong pace, business fixed investment & exports remain weak. On a 12-month basis, overall inflation and inflation for items other than food & energy are running below 2%. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed.
“Consistent with its statutory mandate, the committee seeks to foster maximum employment and price stability. In light of the implications of global developments for the economic outlook as well as muted inflation pressures, the committee decided to lower the target range for the federal funds rate to 1½-1¾%.
“This action supports the committee’s view that sustained expansion of economic activity, strong labour market conditions and inflation near the Committee’s symmetric 2% objective are the most likely outcomes, but uncertainties about this outlook remain. The committee will continue to monitor the implications of incoming information for the economic outlook as it assesses the appropriate path of the target range for the federal funds rate.
“In determining the timing & size of future adjustments to the target range for the federal funds rate, the committee will assess realised & expected economic conditions relative to its maximum employment objective & its symmetric 2% inflation objective. This assessment will take into account a wide range of information, including measures of labour market conditions, indicators of inflation pressures & inflation expectations and readings on financial & international developments.
The 2 committee members who disagreed with the cut, Esther George & Eric Rosengren, wanted no change.
19 September 2019: Fed cuts, sees no economic change ahead, chews cud
1 August 2019: Fed cuts funds rate, rolls over treasuries
Attribution: Fed release.