By Tom Burnett CFA
On September 18, 2024, the Federal Open Market Committee (“FOMC”) voted to lower the Fed Funds rate by 50 basis points to a range of 4.75-5.0%. Of the 12 voting members, 11 voted in favor of the cut, one voted for a cut of 25 basis points. This action is the first cut since 2020.
The Fed will continue to shrink its balance sheet by shedding $25 billion of Treasury holdings and $35 billion of mortgage-backed securities each month.
In its quarterly Summary of Economic Projections, the Fed assumes PCE inflation will decline in 2025 to 2.1%, leading to a Fed Funds rate that will average 3.4% in 2025.
The next FOMC meeting date is November 7, 2024.
Tom Burnett CFA is Director of Research