Fed Cuts Rates by a Quarter Point, Second Straight Reduction

Interest Rate Decisions - The Federal Reserve (Fed) cut the benchmark lending rate by 0.25 percentage point, setting the target range to 3.75%-4% [1] - Two dissents occurred: one favored a 0.5 percentage point cut, and another preferred no change [1] - The Fed's administered rates for interest on reserves and the primary credit rate mechanically decreased by 0.25 percentage point [2] Balance Sheet Adjustments - The Fed will stop redeeming maturing Treasury securities at the end of November, rolling over principal payments going forward [2] - The mortgage cap remains at $35 billion per month, but starting December 1st, all principal payments on maturing agencies will be reinvested in Treasury bills [3] Economic Assessment - Available indicators suggest that economic activity has been expanding at a moderate pace [3] - Job gains have slowed this year, and the unemployment rate has edged up but remained low through August [3] - Downside risks to employment rose in recent months, and uncertainty about the economic outlook remains elevated [4] - There is no change to the Fed's forward guidance; additional adjustments to the target rate will consider many factors [4]