A 25 bps ‘risk management cut’; signals three more to balance risks
As expected, the Federal Reserve cut the federal funds target range by 25 basis points (bps) to 4.00% 4.25%, ending a nine-month pause. Chair Powell called it a “risk management cut” to cushion the economy. Newly appointed governor Stephan Miran dissented, backing a 50 bps move. His failure to win support underscored the Fed’s independence rather than divisions.
Fed speak: Softer on jobs, firmer on inflation. The statement downgraded its labour market review, dropping “solid” and noting that “job gains have slowed”. It also sharpened its inflation language, adding the phrase “has moved up” to “remains somewhat elevated”. The Fed now sees a “shift in the balance of risks” and admits that “downside risks to employment have risen”. While labour-market weakness drove the cut, inflation concerns remain.
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