The Federal Reserve Open Market Committee (FOMC) released their decision on the federal funds rate earlier today at the November meeting and as expected cut the Fed Funds rate by 25bps to 4.50 - 4.75%. The effective rate, or the midpoint of the range continues to come down as shown in the chart below. Long-term we continue to expect rates to trend lower on the short end of the yield curve and for the yield curve to normalize.
Commentary in the press release has been very consistent in that the FOMC sees an economy that continues to expand at a solid pace, a labor market that has moderated somewhat in the magnitude of job gains, and an unemployment rate that has ticked up but is still relatively low. The committee indicated that inflation has moderated, but is still running above their 2.0% long run target.
The FOMC is firmly committed to achieving full employment and price stabilization, with a target inflation rate of 2.0% over the longer term. Committee members continue to observe a wide range of economic factors and are prepared to adjust monetary policy if the attainment of the goals are jeopardized.
We will get the FOMC’s next decision following the upcoming scheduled meeting which is set for December 17-18, 2024.
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