07:00 PM BST, United States - Fed Interest Rate Decision for December:
- actual 4.00%; forecast 4.00%; previous 4.25%;
The Federal Reserve delivered a 25 bp rate cut to 3.75–4.00% and announced it will end balance sheet runoff on December 1, marking a clear step toward policy easing. The decision showed a split committee, with Schmid dissenting in favor of no change and Miran preferring a 50 bp cut.
The Committee said that economic activity continues to expand at a moderate pace, though job growth has slowed and the unemployment rate has ticked up slightly. Inflation, meanwhile, has moved higher since earlier in the year and remains somewhat elevated, prompting the Fed to emphasize its ongoing commitment to returning inflation to 2% over the longer run.
In a key operational shift, the Fed revealed that starting in December it will reinvest all maturing Treasury and agency MBS principal payments into short-term T-bills, effectively halting quantitative tightening and stabilizing the size of its balance sheet.
The statement maintained a cautious tone, noting that downside risks to employment have risen, while uncertainty around the outlook remains high, particularly given the limited availability of recent economic data amid the government shutdown.
Markets viewed the overall message as slightly dovish — major U.S. stock indices posted modest gains, while EURUSD edged lower.
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