Stephen Miran, the newest Fed governor, was the lone dissent.
The Federal Reserve cut interest rates for the first time this year following its two-day policy meeting that concluded on Sept. 17.
Members of the Federal Open Market Committee (FOMC) voted to reduce the benchmark federal funds rate by 25 basis points, setting the new target range at 4 percent to 4.25 percent.
The federal funds rate is a central benchmark that influences borrowing costs across the U.S. economy, affecting everything from business loans to household mortgages.
“Recent indicators suggest that growth of economic activity moderated in the first half of the year. Job gains have slowed, and the unemployment rate has edged up but remains low. Inflation has moved up and remains somewhat elevated,” the FOMC said in a statement.
Officials said that uncertainty surrounding the economy’s outlook “remains elevated.”
Speaking to reporters at the post-meeting news conference, Powell described the quarter-point reduction as a “risk management cut,” signaling risks to the labor market.
“While the unemployment rate remains low, it has edged up, job gains have slowed, and downside risks to employment have risen at the same time, inflation has risen recently and remains somewhat elevated,” Powell said.
He noted that he does not want employment conditions to loosen any further. “The labor market is softening and we don’t need it to soften anymore [and] don’t want it to,” Powell said.
At the same time, according to Powell, there was little appetite for a larger rate cut at the meeting.
“There wasn’t widespread support at all for a 50 basis point,” Powell added. “I think we’ve done very large rate hikes and very large rate cuts in the last five years, and we tend to do those at a time when you feel that policy is out of place and needs to move quickly to a new place. That’s not at all what I feel certainly now, I feel like our policy has been doing the right thing so far this year.”
Stephen Miran, who recently joined the Federal Reserve Board of Governors, was the lone dissenting vote. He preferred a half-point rate cut.
By Andrew Moran
