U.S. Fed Reserve decreases interest rates in monetary policy announcement

Economic Activity Continues: Recent indicators suggest that economic activity has continued to expand at a solid pace despite the slowdown in job gains. The unemployment rate has edged higher, yet it remains low, suggesting resilience in the labor market.

Inflation Slightly Elevated: Inflation has progressed toward the Fed’s 2 percent target, but it remains somewhat elevated. This has influenced the Fed's decision to adjust the interest rates, signaling its commitment to achieving price stability.

Fed's Dual Mandate: The Federal Open Market Committee is focused on achieving maximum employment and maintaining inflation at 2 percent over the longer run. The Fed has expressed confidence that inflation will sustainably reach this target, weighing the risks to both employment and price stability.

Uncertain Economic Outlook: The economic outlook is uncertain, and the committee is attentively monitoring risks associated with its dual mandate. The balance of risks and the incoming data will guide future monetary policy decisions.

Operational Adjustments: The Committee will continue reducing its holdings of Treasury securities, agency debt, and mortgage-backed securities. Additionally, the interest rate paid on reserve balances has been lowered to 4.9 percent, effective September 19, 2024.

Monetary Policy Adjustments: Voting on the policy action saw consensus among most members, with one dissent preferring a smaller rate cut. The decisions reflect the Fed's adaptive stance, prepared to adjust policy as requisite for economic stability.