Fed elects to cut rates for the second straight meeting

The federal funds rate was reduced by 0.25% at the November 6-7 FOMC meeting.

The Federal Open Market Committee (FOMC) concluded its November 6-7 meeting with a 0.25% reduction to the federal funds rate as the Federal Reserve (Fed) continues to shift its policy to support employment conditions and economic growth.

It was the second consecutive FOMC meeting during which the Fed chose to reduce the federal funds rate target range; the 0.50% cut in mid-September was the first rate cut in over four years and the largest by the Fed (excluding COVID-era cuts) since 2008. This latest move – which was largely expected by market participants – lowers the federal funds rate target range to 4.50%-4.75% and brings the Fed’s cumulative rate cuts in 2024 to 0.75%.

“As we suspected, there was no drama Thursday with the Fed’s decision, which was unanimous, and its meeting concluded with minimal changes to its forward guidance,” said Raymond James Chief Investment Officer Larry Adam. “Fed Chair Jerome Powell acknowledged the latest data confirms that the downside risks to the economy have diminished. However, the Fed still views policy rates as restrictive, which suggests that rates will continue to move lower at a gradual pace. The election outcome will not impact monetary policy in the near term.”

While Fed officials indicated that its dual mandate – inflation and employment – was in balance, the post-meeting statement removed the phrase that they are gaining greater confidence on inflation moving sustainably toward two percent.

In his post-meeting press conference, Powell stated the specific wording was eliminated because the Fed had already gained confidence on the path for inflation, and therefore didn’t need that phrase in the statement, noted Raymond James Chief Economist Eugenio Alemán.

The next FOMC meeting takes place December 17-18.

All expressions of opinion reflect the judgments of the Raymond James Chief Investment Officer and Raymond James Chief Economist and are subject to change.

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