Full Text of the Federal Reserve's Decision: Rate Cut and Announcement of End to Balance Sheet Reduction, Two Dissenting Votes Highlight Increased Discord

BlockBeats News, October 30, the Federal Reserve cut the benchmark interest rate by 25 basis points to 3.75%-4.00%, marking the second consecutive rate cut in line with market expectations. Two members dissented, highlighting increased dissent. Kansas Fed Chair Schmid dissented in favor of keeping rates unchanged; Director Milan dissented in this rate decision, believing there should be a 50 basis point cut.

Additionally, the Federal Reserve FOMC statement announced the end of balance sheet reduction on December 1, currently reducing $5 billion in Treasuries and $35 billion in MBS per month. After that, the principal redemptions of mortgage-backed securities will be reinvested in short-term treasuries.

Full Rate Decision:

Available indicators suggest that economic activity is expanding at a moderate pace. Job growth has slowed this year, unemployment has edged up slightly but remains low as of August; more recent data is in line with these trends. Inflation has increased modestly since the beginning of the year and remains somewhat elevated.

The Committee's objective is to achieve maximum employment and inflation at 2% over the long run. Uncertainties about the economic outlook remain high. The Committee continues to monitor risks for both aspects of its dual mandate and sees the downside risks in employment over recent months as having risen.

To support the above objectives and taking into account changes in the balance of risks, the Committee decided to lower the federal funds rate target range by 25 basis points to 3.75% to 4%. When considering further adjustments to the target range for the federal funds rate, the Committee will assess the latest data, changes in the economic outlook, and the balance of risks carefully. The Committee also decided to end the reduction of its securities holdings starting from December 1. The Committee is steadfast in its commitment to supporting maximum employment and pushing inflation back to its 2% target level.

In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the impact of new information on the economic outlook. If risks emerge that could impede the Committee's goals, the Committee will adjust the monetary policy stance as appropriate. The Committee's assessment will take into account a wide range of information, including labor market conditions, inflation pressures and expectations, and the latest financial and international developments.

Members supporting this monetary policy action include Chair Jerome H. Powell, Vice Chair John C. Williams, Michael S. Barr, Michelle W. Bowman, Susan Collins, Lisa D. Cook, Austan D. Goolsbee, Philip N. Jefferson, Alberto G. Musalem, and Christopher J. Waller.

The dissenting members of the vote were Stephen I. Miran, who leaned towards a half-point cut in the federal funds rate target range at this meeting, and Jeffrey R. Schmid, who leaned towards keeping the rate range unchanged at this meeting.