On Thursday, October 30th, the Federal Reserve lowered the benchmark interest rate by 25 basis points to 3.75%-4.00%, marking the second consecutive meeting with a rate cut, in line with market expectations. Two committee members cast dissenting votes, indicating deepening divisions. Among them, Kansas City Fed President Schmid opposed the rate cut, favoring keeping rates unchanged; Governor Miran dissented from this rate decision, believing a 50 basis point cut was warranted.

Additionally, the Fed's FOMC statement announced the end of balance sheet reduction (quantitative tightening) on December 1st. The current pace is $5 billion per month for U.S. Treasuries and $35 billion per month for Mortgage-Backed Securities (MBS). After that, principal payments from mortgage-backed securities will be reinvested in Treasury securities.

Full Text of the Rate Decision

Available indicators show that economic activity is expanding at a moderate pace. Job gains have slowed since earlier this year, and the unemployment rate has edged up but remains low as of August; more recent indicators are consistent with this trend. Inflation has risen since the beginning of the year and remains elevated.

The Committee's goals are maximum employment and inflation at 2 percent over the longer run. Uncertainties about the economic outlook remain elevated. The Committee is closely monitoring the implications of incoming information for both aspects of its dual mandate and judges that the risks to the employment side have increased in recent months.

In support of these goals, and considering the evolving balance of risks, the Committee decided to lower the target range for the federal funds rate by 25 basis points to 3.75 to 4 percent. In considering any further 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 also decided to end the reduction in its aggregate security holdings starting December 1. The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective.

In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. Should risks emerge that could impede the attainment of the Committee's goals, the Committee will adjust the stance of monetary policy as appropriate. The Committee's assessments will take into account a wide range of information, including readings on labor market conditions, inflationary pressures and inflation expectations, and financial and international developments.

Voting for the monetary policy action were: Chair Jerome H. Powell, Vice Chair John C. Williams, Michael S. Barr, Michelle W. Bowman, Susan M. Collins, Lisa D. Cook, Austan D. Goolsbee, Philip N. Jefferson, Alberto G. Musalem, and Christopher J. Waller.

Voting against the action were Stephen I. Miran, who preferred at this meeting to lower the target range for the federal funds rate by one-half percentage point, and Jeffrey R. Schmid, who preferred to maintain the existing target range at this meeting.