In a press conference following the release of the FOMC statement, Fed Chair Jerome Powell said, "I would note that having reduced our policy rate by 75 basis points since September and 175 basis points since last September, the fed funds rate is now within a broad range of estimates of its neutral value and we are well positioned to wait to see how the economy evolves.
00:00The Federal Reserve cut interest rates on Wednesday in another divided vote, but signal it will likely pause further reductions in borrowing costs as the U.S. Central Bank looks for clearer signals about the direction of the job market and inflation that remains somewhat elevated.
00:14New projections issued after the Fed's two-day meeting showed the median policymaker sees just one quarter percentage point cut in 2026, the same outlook as in September, with inflation expected to slow to around 2.4 percent by the end of next year, even as economic growth accelerates to an above trend 2.3 percent, and the unemployment rate remains at a moderate 4.4 percent.
00:40The conditions in the labor market appear to be gradually cooling, and inflation remains somewhat elevated.
00:46In support of our goals, in light of the balance of risks to employment and inflation, today the Federal Open Market Committee decided to lower our policy interest rate by a quarter percentage point.
00:58As a separate matter, we also decided to initiate purchases of shorter-term Treasury securities solely for the purpose of maintaining an ample supply of reserves over time, thus supporting effective control of our policy rate.
01:12A reasonable base case is that the effects of tariffs on inflation will be relatively short-lived, effectively a one-time shift in the price level.
01:20Our obligation is to make sure that a one-time increase in the price level does not become an ongoing inflation problem.
01:28But with downside risks to employment having risen in recent months, the balance of risks has shifted.
01:35Our framework calls for us to take a balanced approach in promoting both sides of our dual mandate.
01:40Accordingly, we judged it appropriate at this meeting to lower our policy rate by a quarter percentage point.
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