Background on Key Figures Involved
The Federal Reserve, the central banking system of the United States, has lowered its target range for the federal funds rate by 25 basis points to a range of 4% to 4.25%, as anticipated by the market. This decision was unanimous among Fed members, although there was division over the magnitude of the adjustment. Only one of the 12 members, recently appointed governor Stephen I. Miran, proposed a reduction of 50 basis points.
Stephen I. Miran was previously an advisor to former U.S. President Donald Trump, who took the oath of office as a Fed governor on September 16 after being confirmed by the U.S. Senate. This recent development adds a layer of intrigue to the Fed’s decision-making process.
Market Expectations and Previous Actions
The market had already priced in a rate adjustment of this scale, relying on signals from FOMC members, especially Fed Chair Jerome Powell. This move concludes an eight-month pause in the rate-cutting cycle initiated in September of the previous year.
During this period, the Fed had reduced rates from a historically high range of 5.25% to 5.50%, as they aimed to alleviate inflationary pressures.
Upcoming Details from Fed Chair Jerome Powell
Soon, Fed Chair Jerome Powell will provide further insights into the monetary policy decision during an upcoming press conference.
Key Questions and Answers
- What was the decision made by the Federal Reserve? The Federal Open Market Committee (FOMC) decided to lower the target range for the federal funds rate by 25 basis points, placing it between 4% and 4.25%.
- Who proposed a larger rate cut? Governor Stephen I. Miran, recently appointed by President Donald Trump, suggested a 50 basis point reduction.
- Why did the Fed choose to cut rates now? The decision was driven by a weaker-than-expected labor market, signaling the need to support economic growth.
- What was the previous rate range? Prior to this adjustment, the federal funds rate target range was 5.25% to 5.50%.
- How long had the Fed paused rate cuts? The Federal Reserve had maintained a pause in its rate-cutting cycle for eight months before the recent decision.
