The Federal Reserve in the United States has reduced interest rates by 0.25 percentage points in response to a labor market that has shown signs of softening, along with inflation gradually moving closer to the central bank’s desired 2% target.
The central bank’s Federal Open Market Committee stated on Thursday that economic growth has remained robust, following a two-day policy meeting where officials opted to lower the benchmark overnight interest rate to a range of 4.5% to 4.75%, as widely anticipated, with a unanimous agreement among decision-makers.
While the previous policy statement highlighted a slowdown in monthly job additions, the latest version took a more comprehensive view of the labor market’s performance. Despite a low unemployment rate, the statement acknowledged that labor market conditions have generally eased.
The Fed indicated that the risks related to both the labor market and inflation were relatively balanced, utilizing similar language from the September meeting statement. Moreover, the updated statement noted that there had been “progress” in price pressures towards meeting the Fed’s target, a modest adjustment from the prior statement’s phrasing on inflation progress.
The core personal consumption expenditures price index, excluding volatile food and energy components, has shown minimal change over the past three months, maintaining an annual rate of around 2.6% as of September.
