In the early morning of October 30, the US Federal Reserve (FED) officially announced a 0.25% interest rate cut, bringing the target interest rate down to 3.75% to 4% - as predicted by analysts and global investors. This decision was made in the context of the US economy showing signs of slowing down, while the administration of President Donald Trump continues to promote policies to stimulate growth and reduce pressure on borrowing costs for businesses.
According to the information released, the Fed will also end its quantitative tightening (QT) program on December 1. The maturity of mortgage-backed securities (MBS) will be reinvested in short-term Treasury bonds (T-Bills) - a move that shows the Fed is prioritizing market liquidation instead of continuing to shrink its balance sheet.
Powell Sends Cautious Message: “December Not Sure to Decrease Further”
In a press conference following the decision, Fed Chairman Jerome Powell stressed that another rate cut in December “is not yet warranted.” He said the Fed will continue to monitor employment, inflation and fourth-quarter GDP data before making any further moves.
“Our goal is to return monetary policy to a neutral position – neither too tight nor too loose,” Powell said. The remarks underscored the internal Chia within the Fed over whether to continue cutting rates or keep them there to avoid rekindling inflation.
