94Ha Viewpoint
On Thursday, November 7th, the Federal Reserve of the United States lowered the federal funds rate target range by 25 basis points to between 4.50% and 4.75%. This marks the second interest rate cut by the Fed this year.
According to a report by The New York Times, the Fed’s decision to cut interest rates again indicates that policymakers believe there are new signs that inflation is finally under control. With President Trump about to return to the White House, the U.S. economy is on the brink of transformation.
After concluding a two-day monetary policy meeting, the Federal Reserve Board stated that recent indicators suggest the U.S. economy continues to expand steadily. The labor market in the U.S. has eased somewhat since earlier this year, with the unemployment rate rising but remaining low. Progress has been made towards the Fed’s long-term 2% inflation target, but it is still “somewhat high.”
The statement mentioned that the risks of achieving employment and inflation goals are roughly balanced. However, the economic outlook in the U.S. is uncertain, and the Fed will continue to monitor the risks faced in achieving its goals.
The statement reiterated that when considering further adjustments to the federal funds rate target range, the Fed will carefully assess future data, evolving outlooks, and risk balances. The Fed will continue to reduce its holdings of Treasury securities, agency debt, and agency mortgage-backed securities.
Fed Chair Powell stated in a press conference after the meeting that the further adjustment to the policy stance in this meeting will help maintain a strong economy and labor market. Over time, monetary policy will move towards a more neutral stance.
Powell mentioned that the Fed’s short-term trajectory will not be affected by President Trump’s election victory, stating, “In the short term, the presidential election will not impact our policy decisions. We do not speculate, we do not guess, and we do not make assumptions.”
On September 18th of this year, the Federal Reserve announced a 50 basis point cut in the federal funds rate target range to between 4.75% and 5%, marking the first rate cut by the Fed since March 2020.
