FOMC Outcome: Fed Cuts Rate By 25 Bps In Biden Era's Last Meeting

The Federal Reserve concluded its final policy meeting of 2024 with a closely watched decision on interest rates. Kicking off on December 17, the two-day meeting culminated in a December 18 press conference, where Fed Chair Jerome Powell announced a rate cut.

US Fed Meeting Outcome

The Federal Reserve concluded its December 2024 meeting with a decision to lower the federal funds rate by 25 basis points, setting the target range at 4.25% to 4.5%. This marks a pivotal adjustment in its monetary policy as the central bank seeks to manage inflation while supporting economic growth.

FOMC interest rate decision 
The decision reflects encouraging signs that inflation is moving closer to the Fed’s 2% objective. “Inflation has made progress but remains somewhat elevated,” the Federal Open Market Committee (FOMC) said. Economic activity, meanwhile, continues to expand at a “solid pace.”

Labor Market Trends Drive Fed’s Move
Labor market conditions have eased since earlier in the year, with unemployment edging up, albeit staying historically low. In its statement, the FOMC emphasized its dual mandate of achieving maximum employment and price stability, noting that risks to these objectives are currently balanced.

Beth M. Hammack was the sole dissenting vote in the 11-member committee, preferring to maintain the target range at 4.5% to 4.75%.

Policy Outlook and Adjustments
As part of the rate cut, the Fed also lowered the interest rate on reserve balances to 4.4% and reduced the primary credit rate to 4.5%.

Balancing Risks and Goals
Looking ahead, the Fed plans to evaluate incoming data, with Chair Jerome Powell highlighting the importance of flexibility. “the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks,” Powell noted in the statement.

In its November meeting, the Federal Reserve reduced interest rates by 25 basis points, lowering the target range to 4.50%–4.75%. Earlier, during the September meeting, the Fed had taken a more aggressive approach, slashing rates by 50 basis points—the first such reduction in four years—marking a significant shift to ease the monetary cycle.

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