Fed cuts rates again amid persistent inflation concerns
On Thursday, the Fed decided to cut interest rates in the U.S. by 25 basis points, aligning with analysts' expectations. This is another cut following the September decision by the Federal Reserve to reduce rates by 50 basis points.
According to Thursday's Fed decision, interest rates in the U.S. will now range from 4.5% to 4.75%.
"In support of its goals, the Committee decided to lower the target range for the federal funds rate by 1/4 percentage point to 4-1/2 to 4-3/4 per cent. 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 will continue reducing its holdings of Treasury securities and agency debt and agency mortgage‑backed securities. The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 per cent objective," reads the Fed's statement after the meeting.
Inflation is "making progress" but remains elevated
"The Committee seeks to achieve maximum employment and inflation at the rate of 2 per cent over the longer run. The Committee judges that the risks to achieving its employment and inflation goals are roughly in balance. The economic outlook is uncertain, and the Committee is attentive to the risks to both sides of its dual mandate," it added.
"Recent indicators suggest that economic activity has continued to expand at a solid pace. Since earlier in the year, labour market conditions have generally eased, and the unemployment rate has moved up but remains low. Inflation has made progress toward the Committee's 2 per cent objective but remains somewhat elevated," the statement after the meeting noted.
The next Reserve meeting is scheduled for December 17-18. After the meeting, the latest macroeconomic projections and dot-plot chart will be presented.
The dollar's exchange rate weakens against a basket of currencies following the Fed's decision by 0.65% to 104.40 points, and the yield on 10-year Treasuries falls by 1 basis point to 4.35%.
