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Source: People's Republic of China in Russian – People's Republic of China in Russian –
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Source: People's Republic of China – State Council News
WASHINGTON, Oct. 29 (Xinhua) — The U.S. Federal Reserve on Wednesday cut its target range for the federal funds rate by 25 basis points to 3.75 percent to 4 percent, marking the second rate cut this year.
Available data suggest economic activity is expanding at a moderate pace, job growth has slowed this year, and the unemployment rate rose slightly but remained low through August, the Federal Open Market Committee (FOMC) said in a statement following its monetary policy meeting.
The FOMC, the Federal Reserve's main monetary policy body, has said it aims to achieve maximum employment and inflation of 2 percent over the long term.
“In support of its objectives and given the changing balance of risks, the Committee decided to lower the target range for the federal funds rate by 1/4 percentage point to 3-3/4 percent to 4 percent,” the statement said.
“When considering further adjustments to the target range for the federal funds rate, the Committee will carefully evaluate incoming data, the changing outlook, and the balance of risks,” the statement said.
Of the 12 FOMC members present at the meeting, 10 voted for a 25 basis point cut, Stephen Miran preferred a 50 basis point cut, and Jeffrey Schmid chose not to change the target range for the federal funds rate.
The move comes as the Fed faces a shortage of reliable economic data due to the federal government shutdown that began October 1.
"The federal government shutdown will have a negative impact on economic activity as long as it continues," Fed Chairman Jerome Powell said at a press conference after the policy meeting, acknowledging that those effects should fade once the shutdown ends.
J. Powell warned that "a further rate cut at the December meeting is not a foregone conclusion. On the contrary, policy is not on a predetermined course."
Speaking about inflation, he noted that “excluding tariffs, inflation is actually not that far from our target of 2 percent.”
Luke Tilley, chief economist at the Wilmington Trust Institute in Delaware, expects the Fed to continue cutting rates through 2026. "Then they'll drop to what we consider a neutral range, which is 2.75 percent to 3 percent," he said.
Franklin Templeton Investments, a global leader in asset management, said inflation concerns will likely push the Fed's rate cut range lower than expected, with the final rate in the current policy cycle potentially higher than 3.5 percent.
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