News & Insights

The Federal Open Market Committee lowered its interest rate target range by 25 basis points to 3.75%–4.00% at its October meeting. The FOMC also concluded its multiyear reduction of its Treasury holdings but will continue to shrink its holdings of mortgage-backed securities. In a change to its previous statement, the FOMC noted that inflation has moved up some since earlier this year, but available indicators suggest that economic activity continues to expand at a moderate pace. Nonetheless, the committee judged that downside risks to employment warranted an additional cut to its interest rate target. Two FOMC members—Stephen Miran and Jeffrey Schmid— Miran preferred to lower the target range by 50 basis points, while Schmid preferred to keep the rate steady.

In the press conference following the meeting, Federal Reserve Chairman Jerome Powell noted that the data that have remained available suggest that the outlook for employment and inflation has not changed much since their previous meeting, with conditions in the labor market cooling while inflation remains elevated. Chairman Powell also noted that a further reduction in the policy rate at the December meeting is not a forgone conclusion—“far from it.”

The FOMC’s summary of economic projections, which maps out the Federal Reserve’s expectations for where interest rates may be headed in the future, generally is released in conjunction with every other FOMC meeting. Since the September meeting included a release of economic projections, there was not a release in conjunction with the October FOMC meeting. The September summary signaled a more dovish stance than the June summary. Although nine Federal Reserve officials projected an additional 50 basis points worth of cuts in that projection, implying the likelihood of a December cut, Chairman Powell expressed that policymakers now bring “strongly different views about how to proceed.”