ECONOMYNEXT – The US Federal Reserve cut is policy rate by 25 basis points and said it was halting quantity tightening, citing unemployment though inflation was still high.
“Available indicators suggest that economic activity has been expanding at a moderate pace,” the Federal Reserve said a statement.
“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. The Committee decided to conclude the reduction of its aggregate securities holdings on December 1.”
The Federal Reserve triggered current economic problems in the US with quantity easing which pushed up inflation to 40-year highs and has made the public unhappy and led to rise in socialism and nationalism in the US since the collapse of the housing bubble.
As liberal policies and free trade was discredited during fiscal and monetary stimulus in aftermath of the housing bubble, President Donald Trump was elected twice.
He has triggered global economic problems with trade restrictions, triggered regime uncertainty within the US, as New Deal policies did in the US in the 1930s worsening investor uncertainty and the Great Depression.
Excess liquidity from the abundant reserve regime in the US however has led to record stock prices, and also gold.
Kansas Fed Governor Jeffrey R. Schmid, a former banker voted against the rate cut.
The full statement is reproduced below.
Federal Reserve issues FOMC statement
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.
The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. Uncertainty about the economic outlook remains elevated. The Committee is attentive to the risks to both sides of its dual mandate and judges that downside risks to employment rose in recent months.
In support of its goals and in light of the shift in the balance of risks, the Committee decided to lower the target range for the federal funds rate by 1/4 percentage point to 3-3/4 to 4 percent. In considering additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee decided to conclude the reduction of its aggregate securities holdings on December 1. The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective.
In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals. The Committee’s assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.
Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michael S. Barr; Michelle W. Bowman; Susan M. Collins; Lisa D. Cook; Austan D. Goolsbee; Philip N. Jefferson; Alberto G. Musalem; and Christopher J. Waller. Voting against this action were Stephen I. Miran, who preferred to lower the target range for the federal funds rate by 1/2 percentage point at this meeting, and Jeffrey R. Schmid, who preferred no change to the target range for the federal funds rate at this meeting.
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