Fed Announces Interest Rate Decision

The Federal Reserve (Fed) has announced its highly anticipated interest rate decision. The Fed has reduced the policy rate by 25 basis points to 4.75%. The statement released by the Fed includes the following:

"Recent indicators show that economic activity continues to expand at a solid pace. Since the beginning of the year, labor market conditions have generally eased, and the unemployment rate has risen but remains low. Inflation has made progress toward the Committee's 2% target but still remains somewhat elevated.

The Committee aims to achieve maximum employment and 2% inflation in the long run. The Committee assesses that the risks to achieving employment and inflation goals are roughly balanced. Economic outlook remains uncertain, and the Committee is mindful of the risks associated with its dual mandate.

To support its objectives, the Committee has decided to lower the federal funds rate target range by 1/4 percentage point to between 4-1/2 and 4-3/4 percent. While evaluating further adjustments to the federal funds rate target range, the Committee will carefully assess incoming data, evolving economic outlook, and balance of risks. The Committee will continue to reduce its holdings of Treasury securities, agency debt, and agency mortgage-backed securities. The Committee is committed to supporting maximum employment and returning inflation to the 2% target.

In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the effects of incoming information on the economic outlook. The Committee will be prepared to adjust the stance of monetary policy as appropriate should risks emerge that could impede the achievement of its objectives. The Committee's assessments will take into account a wide range of information, including labor market conditions, inflation pressures, inflation expectations, and financial and international developments."