Fed cuts interest rates again as inflation concerns persist
On Thursday, the Fed decided to cut interest rates in the US by 25 basis points, aligning with analysts' expectations. This follows the Federal Reserve's September decision to reduce rates by half a percentage point.
As a result of Thursday's Fed decision, interest rates in the US will now range from 4.5 to 4.75 percent.
"In support of its goals, the Committee decided to lower the target range for the federal funds rate by 1/4 percentage point to 4-1/2 to 4-3/4 percent. In considering additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage‑backed securities. The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective," according to the Fed's statement after the meeting.
Inflation is "making progress" but remains elevated
"The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. The Committee judges that the risks to achieving its employment and inflation goals are roughly in balance. The economic outlook is uncertain, and the Committee is attentive to the risks to both sides of its dual mandate," it added.
"Recent indicators suggest that economic activity has continued to expand at a solid pace. Since earlier in the year, labor market conditions have generally eased, and the unemployment rate has moved up but remains low. Inflation has made progress toward the Committee's 2 percent objective but remains somewhat elevated," the statement noted.
The next Reserve meeting is scheduled for December 17-18. After the meeting, the latest macroeconomic projections and dot-plot chart will be presented.
The dollar's exchange rate weakens against a basket of currencies following the Fed's decision by 0.65 percent to 104.40 points, and the yield on 10-year Treasuries falls by 1 basis point to 4.35 percent.
