Full Text of the Federal Reserve's Decision: Rate Cut and Announcement of End to Balance Sheet Reduction, Two Dissenting Votes Highlight Increased Discord

On October 30th, the Federal Reserve reduced the benchmark interest rate by 25 basis points to a range of 3.75% - 4.00%, marking the second consecutive rate cut in line with market expectations. Two members dissented, indicating an increased level of dissent. The Kansas Fed Chair, Schmid, dissented in favor of maintaining the rate unchanged; Director Milan also dissented in this rate decision, believing that a 50-basis-point cut should be implemented. In addition, the Federal Reserve FOMC statement announced that the reduction of the balance sheet would end on December 1st. Currently, $5 billion in Treasuries and $35 billion in MBS are being reduced each month. After that, the principal redemptions of mortgage-backed securities will be reinvested in short-term Treasuries. Full Rate Decision: Available indicators suggest that economic activity is expanding at a moderate pace. Job growth has slowed this year, and the unemployment rate has edged up slightly but remains low as of August; more recent data is in line with these trends. Inflation has increased moderately since the beginning of the year and remains somewhat elevated. The Committee's objective is to achieve maximum employment and inflation at 2% over the long run. Uncertainties about the economic outlook remain high. The Committee continues to monitor risks to both aspects of its dual mandate and views the downside risks to employment in recent months as having risen. To support the above objectives and considering changes in the balance of risks, the Committee decided to lower the federal funds rate target range by 25 basis points to 3.75% - 4%. When considering further adjustments to the target range for the federal funds rate, the Committee will carefully assess the latest data, changes in the economic outlook, and the balance of risks. The Committee also decided to end the reduction of its securities holdings starting from December 1st. The Committee is firmly committed to supporting maximum employment and pushing inflation back to its 2% target level. In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the impact of new information on the economic outlook. If risks emerge that could impede the Committee's goals, the Committee will adjust the monetary policy stance as appropriate. The Committee's assessment will take into account a wide range of information, including labor market conditions, inflation pressures and expectations, and the latest financial and international developments. Members supporting this monetary policy action include Chair Jerome H. Powell, Vice Chair John C. Williams, Michael S. Barr, Michelle W. Bowman, Susan Collins, Lisa D. Cook, Austan D. Goolsbee, Philip N. Jefferson, Alberto G. Musalem, and Christopher J. Waller. The dissenting members of the vote were Stephen I. Miran, who inclined towards a half-point cut in the federal funds rate target range at this meeting, and Jeffrey R. Schmid, who inclined towards keeping the rate range unchanged at this meeting.