Federal Reserve Cuts Interest Rates by 0.25%

The Federal Reserve cut interest rates by a quarter of a percentage point on Thursday, as policymakers took note of a job market that has “generally eased” while inflation continues to move towards the bank’s 2% target, Reuters reported (11-7-24).

“Economic activity has continued to expand at a solid pace,” the central bank’s rate-setting Federal Open Market Committee said at the end of a two-day policy meeting in which officials lowered the benchmark overnight interest rate to the 4.50–4.75% range, as widely expected. The decision was unanimous.

But where the Fed’s previous policy statement noted slowing monthly job gains, the new one referred to the labor market more broadly. Even while the unemployment rate remains low, “labor market conditions have generally eased,” the statement said.

Risks to the job market and inflation were “roughly in balance,” the Fed said, repeating language from the statement released after its September meeting.

The new statement also slightly altered the reference to inflation, saying that price pressures had “made progress” towards the Fed’s objective, rather than the prior language that it had “made further progress.” The personal consumption expenditures price index excluding food and energy items—a key gauge of inflation—has changed little in the last three months, running at a roughly 2.6% annual rate as of September.