The Federal Open Market Committee announced today that it would lower the target range for the federal funds rate by 50 basis points to 4.75-5%. The decision marks the first time the FOMC has trimmed the target range since 2020. Eleven of the 12 FOMC members voted for the 50-basis point cut, with Federal Reserve Governor Michelle Bowman instead favoring a 25-basis point cut.
The FOMC began raising rates in 2022 in an effort to lower inflation to the Fed’s target of 2%. It last raised the target range in July 2023 to 5.25-5.5% but has held steady since then. In its announcement on the rate cut, the FOMC said its members have gained greater confidence that inflation is moving sustainably toward the Fed target “and judges that the risks to achieving its employment and inflation goals are roughly in balance.”
