The latest policy changes by the U.S. Federal Reserve System (Fed) are of significant importance for the future of the country's economy. These changes encompass various areas such as interest rate adjustments, economic growth forecasts, and inflation expectations. These steps are aimed at supporting the economy and balancing risks.
Redaksiya reports that to support the bank's objectives and considering changes in the risk balance, it has been decided to reduce the target range for the federal funds rate by 25 basis points to 3.5-3.75 percent. It was stated that incoming data, the evolving landscape, and the risk balance will be carefully examined when assessing the scope and timing of further interest rate adjustments. This decision aims to ensure economic stability and keep inflation under control.
The statement indicated that Fed Board member Stephen Miran voted against the decision, favoring a 50 basis point rate cut, while Chicago Fed President Austan Goolsbee and Kansas City Fed President Jeffrey Schmid voted to keep the policy rate unchanged. Forecasts for core inflation, excluding volatile energy and food prices, were also lowered to 3 percent from 3.1 percent for this year, and to 2.5 percent from 2.6 percent for 2026, remaining at 2.1 percent for 2027 and 2 percent for 2028. The statement included the phrase, "The FOMC assesses that reserve balances are at sufficient levels and will begin purchasing Treasury bills as needed to maintain reserve levels at sufficient levels." It was stated that current indicators show economic activity expanding at a moderate pace, with employment growth slowing this year and the unemployment rate rising slightly by September. The U.S. economic growth forecast has been raised to 1.7 percent from 1.6 percent for this year, to 2.3 percent from 1.8 percent for next year, to 2 percent from 1.9 percent for 2027, and to 1.9 percent from 1.8 percent for 2028. The statement noted that more recent indicators are consistent with these developments, and inflation has risen since the beginning of the year and continues to remain at a somewhat elevated level. The bank's inflation forecasts have been lowered to 2.9 percent from 3 percent for this year, and to 2.4 percent from 2.6 percent for 2026, remaining at 2.1 percent for 2027 and 2 percent for 2028. Forecasts for the unemployment rate have been kept at 4.5 percent for this year, 4.4 percent for next year, and 4.2 percent for 2028, with a reduction from 4.3 percent to 4.2 percent for 2027. The Fed, which also cut the policy rate by 25 basis points in November and December of last year, paused its interest rate cuts in January after three consecutive meetings of rate reductions last year.