Full Federal Reserve resolution: 25 base points reduced and abbreviated, two negative votes showing growing differences

Source:Kim Xiao

On Thursday, 30 October, the Federal Reserve reduced the base rate by 25 basis points to 3.75 per cent to 4.00 per cent, for the second consecutive meeting, in line with market expectations。The two members voted against, indicating an increase in differences。Among them, the Chairman of the Kansas Federal Reserve, Schmid, objected to a reduction in interest rates and supported the maintenance of interest rates; Councillor Milan objected to the current interest-rate resolution and expressed the view that the rate should be reduced by 50 basis points。

IN ADDITION, THE FED FOMC ANNOUNCED THAT THE BALANCE SHEET WOULD END ON 1 DECEMBER AND THAT IT CURRENTLY HELD $5 BILLION IN DOLLAR DEBT AND $35 BILLION IN MBS PER MONTH. AFTER THAT, THE REPAYMENT OF PRINCIPAL ON MORTGAGE-BACKED SECURITIES WILL BE REINVESTED IN SHORT-TERM NATIONAL DEBT。

Interest rate resolution as a whole

Available indicators indicate that economic activity has expanded at a moderate rate. Growth in employment has slowed since this year, with a slight rise in unemployment, but remained low as of August; more recent indicators are consistent with the above trend. Inflation has risen somewhat earlier in the year and remains relatively high。

The Commission aims to achieve maximum employment and long-term inflation of 2 per cent. Uncertainty about economic prospects remains high. The Committee is closely following the risks of both its dual mission and believes that in recent monthsThe downside risks in employment have increased。

In support of the above objectives, and taking into account the changing risk balance, the Commission decided to reduce the interest rate of the Federal Fund by 25 basis points to 3.75 to 4 per cent. In considering further adjustments between the target zones of the federal funds, the Commission will carefully assess the latest data, changes in economic prospects and the balance of risks。The Commission also decided to end the reduction in its total holdings with effect from 1 December。The Commission is firmly committed to supporting maximum employment and to pushing inflation back to the target level of 2 per cent。

In assessing appropriate monetary policy positions, the Committee will continue to monitor the impact of new information on economic prospects. If there were risks that might hinder the achievement of the Commission ' s objectives, the Commission would adjust its monetary policy position as appropriate. The Committee ' s assessment will take into account a wide range of information, including labour market conditions, inflationary pressures and expectations, as well as updates on financial and international developments。

Members who voted in support of the monetary policy initiative included Jerome H. Powell, Chairman; John C. Williams, Vice-Chairman; Michael S. Barr, Michelle W. Bowman; Susan M. Collins; Lisa D. Cook; Austin D. Goolsbee; Philip N. Jefferson; Alberto G. Musalem; and Christopher J. Waller。

The member voting against was Stephen I. Milan, who preferred a half percentage point reduction in the target area of the Federal Fund at the current meeting, as well as Jeffrey R. Schmidt, who preferred to maintain the interest zone at the current meeting。