#FOMCMeeting The Federal Reserve's Federal Open Market Committee (FOMC) concluded its latest meeting with key decisions that have shaped the current market outlook.
✂️ Key Decision: Interest Rate Cut
Rate Cut: The FOMC voted to lower the target range for the federal funds rate by 25 basis points (bps), bringing the new range to 3.75%–4.00%.
Context: This was the second consecutive rate cut this year and was largely in line with market expectations. Policymakers cited increasing downside risks to employment and signs of a cooling labor market, even as inflation remains somewhat elevated.
🎙️ Fed Chair Powell's Cautionary Stance
The most significant market takeaway came from Chair Jerome Powell's press conference:
December Rate Cut: Powell stressed that a further rate reduction at the December meeting is "not a foregone conclusion—far from it." He noted that the committee holds "strongly differing views" on the path forward.
Data Uncertainty: This cautious tone is amplified by the ongoing US federal government shutdown, which has limited access to key economic data, forcing the Fed to rely on less granular private sources. Powell suggested the uncertainty warrants moving cautiously.
Balance Sheet: The FOMC also decided to conclude the reduction of its aggregate securities holdings (Quantitative Tightening or QT) on December 1, a move that is expected to inject some liquidity.
📈 Market Reaction
The initial market reaction was mixed:
The rate cut itself was priced in.
Powell's comments suggesting the end of the easing cycle may be near caused some market disappointment, as traders had largely anticipated a third cut in December.
Would you like to know more about the impact of the rate cut on the US dollar or equity markets?