Federal Reserve Lowers Key Interest Rate Amid Rising Employment Risks

The decision, which was made in a vote of 9-to-3, comes as the Committee focuses on supporting maximum employment and returning inflation to its 2 percent objective.

Economic Context The Committee noted that economic activity continues to expand at a moderate pace. However, available indicators suggest job gains have slowed throughout the year, causing the unemployment rate to edge up. The FOMC also stated that inflation has moved up since earlier in the year and remains "somewhat elevated."

The statement highlighted a shift in the balance of risks, particularly noting that "downside risks to employment rose in recent months." This concern appears to have prompted the decision to cut rates.

Future Outlook Looking ahead, the Committee stated it will "carefully assess incoming data, the evolving outlook, and the balance of risks" when considering any additional adjustments. It reaffirmed its strong commitment to adjusting the stance of monetary policy as appropriate if risks emerge that could impede the attainment of its goals.

Reserve Maintenance Separately, the FOMC determined that reserve balances have declined to ample levels and will initiate purchases of shorter-term Treasury securities as needed to maintain an ample supply of reserves on an ongoing basis.

Dissenting Votes The vote was not unanimous. Stephen I. Miran preferred a larger reduction of 1/2 percentage point, while Austan D. Goolsbee and Jeffrey R. Schmid preferred to keep the target range unchanged at this meeting.