Federal Reserve cuts interest rate by quarter-point

The Federal Reserve announced Thursday a reduction in the national interest rate by a quarter of a percentage point following steady economic growth, an easing in the labor market and small increases in the unemployment rate. The interest rate range now drops from 4.75%–5% to 4.50%–4.75%.

Following the rate announcement, the Federal Reserve released a statement about indicators that led to this decision:

Recent indicators suggest that economic activity has continued to expand at a solid pace. Since earlier in the year, labor market conditions have generally eased, and the unemployment rate has moved up but remains low. Inflation has made progress toward the Committee’s 2 percent objective but remains somewhat elevated.

In support of its goals, the Committee decided to lower the target range for the federal funds rate by 1/4 percentage point to 4-1/2 to 4-3/4 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 will continue reducing its holdings of Treasury securities and agency debt and agency mortgage‑backed securities. The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective.

This is the second consecutive reduction in the interest rate this year.