The Federal Reserve Open Market Committee decided to cut interest rates a third time, by another 0.25%, to a new range of 1.50-1.75%. As with the two prior cuts in recent months, this move was controversial. The economic community was mixed as to the underlying need for this continued easing, highlighted by the two dissents this time, by governors preferring to keep rates where they were.
The formal statement was little changed from September from a policy standpoint, but was simplified, which tends to follow Chairman Powell’s plain-language style. It noted that the labor market remains strong and economic activity continues to rise at a ‘moderate’ rate. Also noted again were strength in household spending, while business fixed investments and exports remain weaker than the FOMC would like. The term ‘act as appropriate’ has now been removed, which has signaled that this rate cut could be the last for a while (barring further economic deterioration).
The dashboard of relevant Fed variables continues to show mixed results, in keeping with the varied sentiment about the rate cuts:
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