Fed Meeting press conference: Federal Reserve Chairman Jerome Powell explains the decision to cut the policy rate, federal funds rate, by 50 basis points to the range of 4.75%-5% after the September meeting and responds to questions in the post-meeting press conference.
“Squarely focused on our goals.”
“Economy is strong overall.”
“Committed to maintaining economy’s strength.”
“Fed reduced amount of policy restraint today.”
“Our decision today reflects growing confidence that strength in labor market can be maintained.”
“Longer term inflation expectations appear well anchored.”
“Our primary focus had been on bringing down inflation, which imposes significant hardship.”
“Our patient approach has paid dividends.”
“Inflation is much closer to our goal.”
“Upside risks to inflation have diminished and downside risks to labor market have risen.”
“We are attentive to risks on both sides of mandate.”
“Our projections are not a plan or decision.”
“We will adjust policy as necessary.”
“If the economy remains solid, we can dial back the pace of cuts; equally, if the labor market deteriorates, we can respond.”
“Since the last meeting, there has been a lot of data.”
“Benchmark revisions showed payrolls may be revised down.”
“We concluded that 50 bps cut was the right thing.”
“We will make future decisions based meeting by meeting.”
“We are recalibrating our policy stance.”
“Nothing in our projections that suggest we are in a rush.”
The US Federal Reserve (Fed) announced on Wednesday that it lowered the policy rate, federal funds rate, by 50 basis points to the range of 4.75%-5% following the September policy meeting. Although the market forecast was for a 25 bps rate cut, there were growing expectations for a 50 bps reduction.
The revised Summary of Economic Projections (SEP), the so called dot-plot published alongside the policy statement, showed that projections imply 50 bps of additional rate cuts in 2024 from current level, 100 bps more in 2025 and another 50 bps in 2026.
Fed policy statement key takeaways
“Inflation has made further progress toward 2% objective, remains somewhat elevated.”
“FOMC has gained greater confidence in inflation moving sustainably toward 2%, judges risks to employment and inflation goals are roughly in balance.”
“Economic outlook is uncertain, FOMC is attentive to risks on both sides of mandate.”
“Economic activity expanding at solid pace, job gains have slowed, unemployment rate has moved up but remains low.”
“Will carefully assess incoming data, evolving outlook and balance of risks in considering additional rate adjustments.”
“Quantitative tightening continues at previous pace.”
“Vote in favor of policy was 11-1, with Fed Governor Bowman dissenting; bowman preferred a 25-basis-point reduction.”
Key highlights from revised Summary of Economic Projections
- Fed officials’ median view of fed funds rate at end-2024 4.4% (prev 5.1%).
- Fed officials’ median view of fed funds rate at end-2025 3.4% (prev 4.1%).
- Fed officials’ median view of fed funds rate at end-2026 2.9% (prev +3.1%).
- Fed officials’ median view of fed funds rate at end-2027 2.9%.
- Fed officials’ median view of fed funds rate in longer run 2.9% (prev 2.8%).”
- Fed projections show 9 of 19 officials see policy rate above the median forecast for 2024, 9 see it at the median, one sees it below that.
- Fed policymakers see 4.4% unemployment rate at end of 2024 and 2025 versus 4.2% now.
- Fed policymakers see end-2024 PCE inflation at 2.3% versus 2.6% in June projections; core seen at 2.6% versus 2.8%.
- Fed policymakers see 2.0% GDP growth in 2024 versus 2.1% in June.
Market reaction to Fed policy announcements
The US Dollar came under heavy selling pressure with the immediate reaction to the Fed rate decision. At the time of press, the US Dollar Index was down 0.55% on the day at 100.47.
