The Line: The Fed Cut Rates Another 0.25%

Today, The Line tries to fight through a nasty stomach virus to bring you the latest from the Fed.

The Fed Cut Rates Another 0.25%

By a 9-3 vote, the Federal Reserve approved a 25-basis point reduction in the federal funds rate. It’s worth noting that the last time 3 committee members dissented was September 2019. In case you’re curious, two of the dissenters were against cutting rates and one wanted a bigger cut.

Here’s what else you need to know:

• This was the third consecutive 0.25% rate cut by the Fed.
• In the Fed’s economic projections, they expect one more rate cut in 2026 and one in 2027.
• Their projections also show they expect stronger economic growth and lower inflation next year than their previous projections released in September.
• In addition to the rate cut, the Fed also announced it will resume purchasing Treasury securities.

To sum up, while the markets got what they wanted, the future is less certain. And remember that the Fed had to make this decision with no recent government data on jobs or inflation, making it very difficult for them to balance their dual mandate of price stability and maximum employment.

While I’ve certainly been critical of the Fed over the past few years, I think a cut was the right move at this time. While inflation has yet to come down to their 2% annual target, it hasn’t been rising significantly either. On the other hand, even without any recent BLS data it’s clear the labor market continues to soften. The bigger concern was employment and they acted accordingly.