The U.S. Federal Reserve Commission announced on October 29 that it has again lowered the federal fund interest rate target range by 25 basis points to between 3.75% and 4.00%. Federal Reserve Chairman Powell said that day that the Fed¡¯s December monetary policy conference further reduced interest rates was not on the table.

The Federal Reserve Committee concluded its two-day monetary policy meeting that day. Its policy-making body, the Federal Open Market Committee, issued a statement after the meeting saying that existing indicators show that U.S. economic activity has been expanding at a moderate rate. Employment growth has slowed this year, the unemployment rate has increased slightly, and the inflation rate has increased since the beginning of the year. It is still at a relatively high level. In view of the change in the risk balance, it was decided to lower the target range of the federal funds rate by 25 basis points.

The Federal Open Market Commission will carefully assess the latest data, changing economic prospects and risk balance when considering further adjustments to the federal fund interest rate target range.

This is the fifth rate drop since September 2024, after the Federal Reserve cut 25 basis points on September 17, and 10 out of 12 members of the Federal Open Market Committee voted in favour of a 25 basis point reduction, Steven Milan tended to cut 50 basis points, and Jeffrey Schmidt tended to remain unchanged.

Powell said at a press conference after the monetary policy meeting that "the 'shutdown' of the federal government will continue to put pressure on economic activity". However, these effects "will be reversed" after the "lockout" is over.

The government's "stopping" resulted in a delay in the release of several official economic data, while the data released before the "stopping" showed that the momentum of growth in U.S. economic activity may be stronger than expected. Powell therefore said that further interest rate cuts at the Fed's December monetary policy meeting were not a nail on the board, and the situation was "far from that."

The Federal Reserve has recently been torn between its two major goals of stabilizing prices and achieving full employment. Cutting rates too quickly or too early may accelerate inflation; maintaining restricted interest rates too long may further weaken the job market. Powell emphasized at a press conference that in the process of balancing these two goals, there is no absolutely safe path for the Federal Reserve to make policy.

Analysts believe that while U.S. inflation is still far above the Fed's 2% target, employment has become the focus of the Fed's concerns. Morgan Stanley predicts that the Fed will continue to lower interest rates until January 2026, and another two rate cuts in April and July 2026, eventually reducing the federal fund's interest rate target range to the range of 3.00% to 3.25%. Franklin Dempton Investment Company predicts that inflation concerns will lead to the Fed's rate cuts lower than expected, and the final target range of policy rates may be higher than 3.5% in this round.