On Thursday, September 18, the Federal Reserve announced a 25 basis point rate cut, lowering the target range for the federal funds rate to 4%-4.25%, resuming the rate-cutting pace that had been paused since last December. Newly appointed Federal Reserve Governor Stephen I. Miran cast a dissenting vote, supporting a 50 basis point cut.

The dot plot shows that among the 19 officials, 9 expect two more rate cuts in 2025, two expect one rate cut, and six expect no further cuts.

Full Text of the Rate Decision

Recent indicators show that economic activity growth has slowed in the first half of this year. Job growth has decelerated, and the unemployment rate has slightly increased but remains low. Inflation has rebounded and remains elevated.

The committee's goal is to achieve maximum employment and a long-term inflation rate of 2%. Uncertainty regarding the economic outlook remains high, and the committee is attentive to the risks facing its dual mandate, believing that the downside risks to employment have increased.

To support the established goals and in light of the changing risk balance, the committee decided to lower the target range for the federal funds rate by 25 basis points to 4%-4.25%. In considering whether to further adjust the target range for the federal funds rate, the committee will carefully assess the latest data, changes in the outlook, and the risk balance. The committee will continue to reduce its holdings of U.S. Treasury securities, agency debt, and agency mortgage-backed securities. The committee is firmly committed to supporting maximum employment and restoring inflation to the 2% target.

In assessing the appropriate monetary policy stance, the committee will continue to monitor the impact of the latest information on the economic outlook. If risks emerge that could impede the committee's goals, the committee is prepared to adjust the monetary policy stance in a timely manner. The committee's assessment will take into account a wide range of information, including labor market conditions, inflation pressures and expectations, as well as financial and international developments.

Voting in favor of this monetary policy action were Chair Jerome H. Powell, Vice Chair John C. Williams, Michael S. Barr, Michelle W. Bowman, Susan M. Collins, Lisa D. Cook, Austan D. Goolsbee, Philip N. Jefferson, Alberto G. Musalem, Jeffrey R. Schmid, and Christopher J. Waller. Voting against was Stephen I. Miran, who favored a 50 basis point cut to the federal funds rate target range at this meeting.

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