It was taken without consensus… behind the scenes of the Federal Reserve’s decision to lower interest rates

Reduce board US Federal Reserve Interest rates Today, Wednesday, in an unsurprising step he took without consensus for the second time in two months, speaking about the risks that threatened the labor market. "In recent months"This reduction returns a quarter of a percentage point" target="_blank"
The benchmark interest rate fell to a range of 3.75% to 4%.
This is the second rate cut this year, after the first cut at the previous meeting in September, and the measure was widely expected by financial markets.
However, this measure has an unusual aspect, as two of the 12 members of the Council opposed it.
Conservative member Stephen Meiran, recently appointed by President Donald Trump, wanted, as last month, a larger cut by half a point. His position was not surprising, as Miran had widely reported it.
In contrast, Kansas City Federal Reserve Chairman Jeffrey Schmid opposed any interest rate cuts, and had made clear in a speech earlier this month that he considered inflation too high to justify further easing in monetary policy.

Members’ differing opinions

After announcing the cut, US Federal Reserve Chairman Jerome Powell said that the board may not repeat its decision in December; Because its members have different opinions about what would be appropriate then.

Powell said in a press conference: "During our meeting, participants expressed very different views on how to proceed in December. It is not guaranteed that any further cut in key interest rates will be passed at the December meeting."
He also pointed out that the US government shutdown "It will negatively impact economic activity, but this impact is expected to fade once the lockdown ends"

Assessing the labor market situation

The Federal Reserve is responsible for setting interest rates by evaluating the labor market situation on the one hand, and the price level on the other hand.
The Federal Reserve confirmed in its statement that "Risks to employment have increased in recent months"
The institution lowers the key interest rates that guide borrowing costs, to support the economy, and in return raises them to limit the rise in prices if they get out of control.
The US Federal Reserve also indicated that it will end the quantitative easing program on December 1.
Until now, the bank had stopped buying back all the securities it held when they matured, such as government bonds, and this led to a significant reduction in its balance sheet, which had swelled during the Covid pandemic.
By resuming the purchase of these securities, The bank injects liquidity back into the economy, which is a way to support it.

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