Live: Federal Reserve Chair Jerome Powell Says The Economy Is In A 'Really Good Place'
Today’s Decision Was a Close Call, Powell Said
2 hr 33 min ago
Beth Hammack, president of the Federal Reserve Bank of Cleveland, voted against the rate cut Wednesday, instead wanting to hold rates at their current level.
It was the second dissent this year, following Fed Governor Michelle Bowman, who in September voted against cutting the rate by a steeper-than-usual 50 basis points, preferring a 25-point cut instead.
At a post-decision press conference, Federal Reserve chair Jerome Powell said the decision to cut rates today was closer than in past meetings.
“We thought it was the best decision to foster achievement of both of our goals, maximum employment and price stability,” Powell said. “We see the risks as two-sided. Move too slowly and needlessly undermine economic activity in the labor market, or move too quickly and needlessly undermine our progress on inflation. So we’re trying to steer between those two risks, and on balance, we decided to go ahead with a further cut.”
Powell Says The Economy Is In ‘A Really Good Place’
2 hr 50 min ago
In their economic projections, committee members said they expect higher inflation and interest rates. However, the committee also expects higher Gross Domestic Product (GDP) for this year and next year and lower unemployment than they expected the last time they published their forecasts.
“We think the economy is in a really good place, and we think the policy is in a really good place,” he said.
Chair Jerome Powell Says The Fed is Still Trying to Balance Unemployment and Inflation
2 hr 59 min ago
Powell said the central bank is still working to balance its dual mandate of maximum employment and low inflation.
With employment remaining stable and inflation staying stubborn, Powell indicated that gives central bankers more runway to cut less aggressively in the upcoming year.
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Watch Powell’s Press Conference Live
“With today’s action, we have lowered our policy rate by a full percentage point from its peak, and our policy stance is now significantly less restrictive,” Powell said. “We can, therefore, be more cautious as we consider further adjustments to our policy rate.”
Central Bankers Scaled Back Their Projections for 2025 Cuts
3 hr 13 min ago
Central bankers also released their Summary of Economic Projections, a snapshot of the forecasts for each individual voting member of the policy committee.
On average, central bankers scaled back their expectations for rate cuts in the new year. The median fed fund rate projection for 2025 was 3.9, compared to the 3.4 expected when the last summary came out in September.
The Federal Reserve Cut Its Influential Interest Rate
3 hr 35 min ago
The Federal Reserve cut its federal funds rate by a quarter percentage point to a range of 4.25% to 4.5%.
This is the third cut central bankers have made in as many meetings and bring fed funds rate range to a full percentage point lower than it was at the start of the year.
There was one dissenting vote to the policy move, cast by Cleveland Federal Reserve President Beth Hammack.
The committee also announced it would reduce its holdings of Treasury securities and agency debt and agency mortgage‑backed securities.
Read more about today’s decision here.
The Economy Has Shifted Since the Fed Last Met
4 hr 8 min ago
The economic landscape has changed some since the last time the committee met in November. Unemployment has not risen as much as central bankers expected and inflation hasn’t cooled as much as the committee had hoped.
The FOMC uses interest rates as a tool to stimulate or stifle the economy. When the economy is running too hot and fueling inflation, the committee will raise rates to discourage borrowing and spending. When the economy slows, it usually brings a wave of layoffs, which the committee attempts to avoid by lowering rates and encouraging spending.
The Fed Will Make Predictions About Its Moves Next Year. Here’s What to Know
4 hr 36 min ago
Fed watchers will learn in more detail what recent economic data means for the central bank when it releases its Summary of Economic Projections on Wednesday, in conjunction with its policy decision.
The projections are a snapshot of individual committee members’ best guesses on the future of unemployment, inflation and rate cuts. Economists expect that the average prediction will be three rate cuts in 2025, fewer than were expected when they last published their expectations in September.
Read more about what to know ahead of the announcement here.
What to Expect From The Federal Reserve’s Interest Rate Decision
4 hr 36 min ago
The Federal Reserve is widely expected to cut borrowing costs when it meets next Wednesday, and officials could shed light on how recent economic data might affect their decisions on interest rates in the new year.
Financial markets are pricing in a 99% chance the Federal Reserve will cut the fed funds rate by a quarter percentage point to a range of 4.25% to 4.5%, according to the CME Group’s FedWatch tool, which forecasts rate movements based on fed funds futures trading data
Read more about what to expect from the interest rate decision here.
-Diccon Hyatt