Federal Reserve's Full Resolution: Cut interest rates by 25 basis points and announced balance sheet reduction, with some dissenting votes indicating increasing internal divisions

The Federal Reserve has again lowered interest rates by 25 basis points and announced the end of balance sheet reduction on December 1. Two members voted against, one supporting no rate cut and the other supporting a 50 basis point cut. On October 30 (Thursday) Beijing time, the Federal Reserve lowered the benchmark interest rate by 25 basis points to 3.75%-4.00%, marking the second consecutive meeting of rate cuts, in line with market expectations. The dissenting votes from two members indicate increasing divisions. Among them, Kansas City Fed President Esther George opposed the rate cut and supported maintaining the current rate; Governor Michelle Bowman opposed this rate decision, believing a 50 basis point cut should be made. Additionally, the Federal Reserve FOMC statement announced the end of asset balance sheet reduction on December 1, currently reducing $5 billion in U.S. Treasuries and $35 billion in MBS each month. After that, the principal of mortgage-backed securities will be reinvested in short-term government bonds. Currently, the three major U.S. stock indices maintain an upward trend, with the Dow up 0.22%, the S&P 500 index up 0.14%, and the Nasdaq up 0.51%. The full text of the rate decision indicates that economic activity is expanding at a moderate pace. Employment growth has slowed this year, and the unemployment rate has slightly increased but remains at a low level as of August; more recent indicators are consistent with this trend. Inflation has risen since the beginning of the year and remains at relatively high levels. The committee's goal is to achieve maximum employment and a long-term inflation rate of 2%. Uncertainty regarding the economic outlook remains high. The committee is closely monitoring the risks associated with its dual mandate and believes that the downside risks to employment have increased in recent months