Fed cuts rates again as inflation pressures persist
On Thursday, the Federal Reserve cut interest rates in the US by 25 basis points, aligning with analysts' expectations. This follows the September decision to reduce rates by half a percentage point.
According to Thursday's decision, interest rates in the US will now range from 4.5 to 4.75 per cent.
"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 17-18 December, Greenwich Mean Time. After the meeting, the latest macroeconomic projections and dot-plot chart will be presented.
Following the Fed's decision, the dollar's exchange rate weakened against a basket of currencies by 0.65 per cent to 104.40 points, and the yield on 10-year Treasuries fell by 1 basis point to 4.35 per cent.
