Federal Reserve Cuts Rate by 25 Basis Points to 4.25%-4.50% in Third Cut of 2024
On December 18, 2024, the Federal Reserve concluded a meeting of the Federal Open Market Committee (FOMC) in Washington and issued a statement at 2:00 p.m. EST announcing that it had lowered the target range for the federal funds rate by 25 basis points (1/4 percentage point) to 4.25% to 4.50%. It was the Federal Reserve's third rate cut of 2024.
The statement's assessment of the economy and inflation was that recent indicators suggest U.S. economic activity has continued to expand at a solid pace; since earlier in the year, labor market conditions have generally eased, and the unemployment rate has moved up but remains low; and inflation has made progress toward the Committee's 2 percent objective but remains somewhat elevated.
The Committee said it seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run, and judges that the risks to achieving its employment and inflation goals are roughly in balance. The statement said the economic outlook is uncertain and that the Committee is attentive to the risks to both sides of its dual mandate.
On further policy moves, the statement said that, in considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks, and that the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities. The Committee said it will continue to monitor the implications of incoming information for the economic outlook and would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of its goals, taking into account readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments. It reiterated that it is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective.
The monetary policy action was approved by an 11-to-1 vote. Voting in favor were Chair Jerome H. Powell, Vice Chair John C. Williams, and Thomas I. Barkin, Michael S. Barr, Raphael W. Bostic, Michelle W. Bowman, Lisa D. Cook, Mary C. Daly, Philip N. Jefferson, Adriana D. Kugler, and Christopher J. Waller. Voting against the action was Beth M. Hammack, who preferred to maintain the target range for the federal funds rate at 4-1/2 to 4-3/4 percent.
An implementation note issued the same day showed that the Board of Governors voted unanimously to lower the interest rate paid on reserve balances to 4.40 percent, effective December 19, 2024. The FOMC directed the Open Market Desk at the Federal Reserve Bank of New York to undertake operations to maintain the federal funds rate in a target range of 4-1/4 to 4-1/2 percent, including standing overnight repurchase agreement operations with a minimum bid rate of 4.50 percent and an aggregate operation limit of $500 billion, and standing overnight reverse repurchase agreement operations at an offering rate of 4.25 percent with a per-counterparty limit of $160 billion per day.
The implementation note also showed that the Federal Reserve will continue reducing its securities holdings: principal payments from holdings of Treasury securities maturing in each calendar month that exceed a cap of $25 billion per month will be rolled over at auction, and principal payments from agency debt and agency mortgage-backed securities that exceed a cap of $35 billion per month will be reinvested into Treasury securities. In a related action, the Board of Governors voted unanimously to approve a 1/4 percentage point decrease in the primary credit rate to 4.50 percent, effective December 19, 2024, approving requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, and San Francisco.
Related: Federal Reserve Cuts Rate by 25 Basis Points to 4.50%-4.75% Range in Second Cut of 2024
(Source: Board of Governors of the Federal Reserve System)
Source: Board of Governors of the Federal Reserve System
Published by GSM · USA (original Chinese edition)
Photo: 图：位于美国华盛顿的美联储总部马里纳·埃克尔斯大楼（Eccles Building）北侧立面。AgnosticPreachersKid 摄，CC BY-SA 3.0，经 Wikimedia Commons。 / Photo: The north side of the Marriner S. Eccles Building, headquarters of the Federal Reserve in Washington, D.C. By AgnosticPreachersKid, CC BY-SA 3.0, via Wikimedia Commons.
- 2024-11-07Federal Reserve Cuts Rate by 25 Basis Points to 4.50%-4.75% Range in Second Cut of 2024
- 2024-12-18Federal Reserve Cuts Rate by 25 Basis Points to 4.25%-4.50% in Third Cut of 2024This story
