At its October Federal Open Market Committee (FOMC) meeting, the Fed lowered its policy rate by 25 basis points to a range of 3.75-4.00%. This marked the Fed's second consecutive rate cut and fully aligned with market expectations.
The FOMC statement indicated that economic growth continues at a moderate pace and the unemployment rate remains low, despite a slowdown in hiring. The committee observed that inflation has increased this year and continues to be high.
Fed to End Balance Sheet Reduction Program on December 1st
In a significant policy shift, the Federal Reserve also announced the conclusion of its monetary tightening program. The balance sheet reduction program is scheduled to end on December 1st. Previously, the Fed had been selling approximately $5 billion in Treasury bonds and $35 billion in mortgage-backed securities each month.
The decision to cut rates was not unanimous. Fed member Schmid dissented, advocating for interest rates to remain unchanged. Conversely, member Milan voted for a 50 basis point cut, asserting that a more substantial easing measure was necessary.