The Federal Reserve announced that economic activity in the United States has been growing at a moderate pace. According to the Federal Open Market Committee (FOMC), job gains have slowed in 2025, and while the unemployment rate increased slightly through August, it remains low. Recent data continues to reflect these trends. Inflation has risen since earlier this year and is still somewhat elevated.
The FOMC stated, “The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. Uncertainty about the economic outlook remains elevated. The Committee is attentive to the risks to both sides of its dual mandate and judges that downside risks to employment rose in recent months.”
To address these developments, the FOMC decided to lower its target range for the federal funds rate by a quarter percentage point, setting it at 3-3/4 to 4 percent. The Committee also announced it will end reductions of its aggregate securities holdings on December 1.
“In support of its goals and in light of the shift in the 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 to 4 percent. In considering additional 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 decided to conclude the reduction of its aggregate securities holdings on December 1. The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective,” according to their statement.
The FOMC indicated it would continue monitoring economic indicators closely: “In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede attainment of goals. The Committee’s assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.”
Ten members voted in favor of lowering rates: Jerome H. Powell (Chair), John C. Williams (Vice Chair), 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.
Two members dissented: Stephen I. Miran preferred a larger cut by half a percentage point; Jeffrey R. Schmid favored no change.
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