Fed Cuts Interest Rates
The Federal Open Markets Committee has decided to lower the target range for the federal funds rate by 1/4 percentage point to 3-3/4 to 4%, in support of its goals and in light of the shift in the balance of risks, it reported Oct. 29.
“Available indicators suggest that economic activity has been expanding at a moderate pace,” according to Federal Reserve Chairman Jerome Powell in his opening statement announcing the cut. GDP rose at a 1.6% pace in the first half of the year, down from 2.4% last year.
“Data available prior to the shutdown show that growth in economic activity may be on a somewhat firmer trajectory than expected, primarily reflecting stronger consumer spending. Business investment in equipment and intangibles has continued to expand, while activity in the housing sector remains weak.
“The shutdown of the federal government will weigh on economic activity while it persists, but these effects should reverse after the shutdown ends.”
The Federal Reserve’s statement read: “Available indicators suggest that economic activity has been expanding at a moderate pace. Job gains have slowed this year, and the unemployment rate has edged up but remained low through August; more recent indicators are consistent with these developments. Inflation has moved up since earlier in the year and remains somewhat elevated.”