Fed cuts interest rates by a quarter percentage point

Federal Reserve Interest Rate Decision - The Federal Reserve has reduced interest rates by a quarter point to a new range of 3.5% to 3.75% [1] - The decision saw three dissenting votes, marking the first occurrence of such dissent since September 2019 [1] Dissenting Opinions - Two dissenters opposed the rate cut, including Chicago Fed President Austin Goulby and Kansas City Fed President Jeff Smith [1] - A new Fed governor, Steven Myron, also dissented, advocating for a 50 basis point cut [2] Future Rate Outlook - The Fed indicated a higher threshold for future rate cuts, stating it will assess incoming data for timing and extent of future moves [3] - The consensus suggests only one more cut next year and another in 2027 [3] Balance Sheet Management - The Fed has determined its balance sheet is at an ample level of reserves and plans to purchase shorter-term treasuries [4] - Starting December 12, the Fed will begin buying $40 billion in bills, which is sooner than market expectations [5] Economic Outlook - The GDP outlook for next year has been revised upward by half a point to 2.4% [6] - The inflation outlook has been slightly lowered to 2.5%, approaching the target of 2.1% by 2027 [6] Employment and Inflation - The economy is expanding at a moderate pace, with job gains slowing and a slight increase in unemployment [7] - The statement no longer describes the unemployment rate as low, indicating a shift in economic conditions [7] Dot Plot Insights - The dot plot reveals that six officials wanted no change in the funds rate, with seven preferring no change for next year [8] - One official, presumed to be Steven Myron, advocates for a rate reduction to 2.12% next year, which is 150 basis points lower [8]