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\n Federal Reserve Chairman Jerome Powell’s term at the top of the central bank ends in May.\n <\/p>\n
All but one member of the Federal Open Markets Committee voted in favor of Wednesday\u2019s decision. Stephen Miran, who joined the board Tuesday, voted for a 50-basis-point cut.<\/p>\n
\u201cA 25 basis point cut suggests that the Fed is trying to strike a balance \u2014 acknowledging emerging labor market weakness while remaining cautious on inflation,\u201d Trepp<\/a> Chief Economist Rachel Szymanski<\/a> said in an email. \u201cIt\u2019s a signal of flexibility, not a full pivot.\u201d<\/p>\n Fed officials updated the guidance released by the central bank after the vote to reflect a weakening job market.<\/p>\n \u201cJob gains have slowed, and the unemployment rate has edged up but remains low,\u201d the guidance says, a negative shift from July\u2019s description of solid labor market conditions. Fed governors said the downside risks to employment have also risen.<\/p>\n The cut was largely predicted by investors, with CME Group\u2019s FedWatch tool<\/a> on Tuesday forecasting a 96% chance of a 25-basis-point shift in the federal funds rate <\/a>and\u00a0a 4% chance of a 50-basis-point cut.\u00a0\u00a0<\/p>\n Wednesday\u2019s decision to move the federal funds rate to a range between 4% and 4.25% has already largely been baked into markets. Bond yields have fallen in September after a series of revisions to economic reports pared back reported job growth in the last year, giving investors confidence that the Fed would ease monetary policy.\u00a0<\/p>\n Yields for 10-year Treasury<\/a> bonds fell to their lowest point since April<\/a> ahead of the Federal Open Market Committee<\/a> meeting Wednesday.\u00a0<\/p>\n \u201cThe Fed\u2019s 25 basis point cut reinforces what the market had already started anticipating, and in many ways, pricing and activity had already begun to reflect it,\u201d Dan Berman, U.S. real estate managing partner at law firm\u00a0Herbert Smith Freehills Kramer, said in an email.<\/p>\n Berman has tracked a steady uptick in investor engagement in recent weeks, including from large capital sources that have been sidelined for years. But they\u2019ve been drawn back to the market more by pricing than the cost of capital, he said.\u00a0<\/p>\n Even if widely expected, the Fed\u2019s decision provides some solid ground in what has been a murky economic outlook.<\/p>\n \u201cWhile a 25-basis-point reduction may not materially transform the landscape overnight, it meaningfully improves investor psychology, underwriting conditions, and the cost of capital \u2014 key ingredients for renewed momentum,\u201d Avison Young CEO\u00a0Mark Rose<\/a> said in a statement.<\/p>\n The decision to cut rates comes despite inflation running far ahead of the Fed\u2019s 2% target rate. Overall inflation in August rose 40 basis points<\/a> to reach 2.9%. Core inflation, which strips out volatile sectors, was 3.1%, according to consumer price index data released this month.\u00a0<\/p>\n Officials at the Fed previously pointed to what had looked like strong job growth as justification for keeping rates steady to\u00a0help combat price growth<\/a>. But there are signs that the jobs market is less resilient than reporting had indicated. Earlier this month, the Bureau of Labor Statistics revised its data<\/a> to cut 911,000 jobs from the total that it previously said had been created in the year ending in March.\u00a0\u00a0<\/p>\n \u201cTwenty-five basis points feels like the \u2018goldilocks\u2019 outcome in that it will feel just right,\u201d LaSalle Investment Management<\/a> Managing Director Allan Swaringen<\/a> said in an email. \u201cFifty basis points might signal a more negative economic outlook and might worry market participants, and holding rates would be frustrating as some expectation of a cut is currently priced in.\u201d<\/p>\n This is a developing story.<\/p>\n","protected":false},"excerpt":{"rendered":"The Federal Reserve cut its benchmark interest rate by 25 basis points Wednesday.\u00a0 The widely expected move was…\n","protected":false},"author":3,"featured_media":234614,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[126125,64,79,126123,1597,2308,266,267,142,63558,126124,126126,766,67,132,68],"class_list":{"0":"post-234613","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-10-year-us-treasury-yield","9":"tag-business","10":"tag-economy","11":"tag-federal-funds-rate","12":"tag-federal-reserve","13":"tag-fomc","14":"tag-inflation","15":"tag-interest-rates","16":"tag-jerome-powell","17":"tag-the-fed","18":"tag-treasury-bonds","19":"tag-treasury-yields","20":"tag-unemployment","21":"tag-united-states","22":"tag-unitedstates","23":"tag-us"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@us\/115221426814353767","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/234613","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/comments?post=234613"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/234613\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media\/234614"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media?parent=234613"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/categories?post=234613"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/tags?post=234613"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}