As expected, the Federal Reserve voted to reduce its interest rate target to 1.75% to 2.00% at its September policy meeting.
The US central bank has now cut interest rates at two consecutive FOMC meetings, after not cutting rates for more than ten years amid the US economy’s longest-ever expansion.
The Fed’s interest rate decision was not surprising. However, the decision was far from unanimous. In fact, three voters dissented from the 25 basis point cut.
Here’s how every Fed member voted at today’s FOMC meeting:
There were seven votes in favor of the 25 basis point cut.
Two FOMC members voted to maintain the bank’s previous target.
One FOMC member advocated for a 50 basis point reduction.
Today’s vote shows that the FOMC remains deeply divided on the state of the US economy, which continues to serve up conflicting data as geopolitical risks mount – and the stock market trades near all-time highs.
The Dow Jones Industrial Average slid more than 175 points after the Fed published its decision, indicating that investors were disappointed that the bank did not preview a more deliberate easing policy.
Right now, Fed funds futures indicate that traders do not expect a third straight interest rate cut at the next FOMC meeting at the end of October.
According to CME’s FedWatch Tool, there’s a 32% probability that the Fed will reduce its target range to 1.5% to 1.75%. However, that doesn’t mean Wall Street believes the central bank is done cutting rates.
There are roughly even odds for an interest rate cut in December, and the probability ticks up to 65% for the January 2020 FOMC meeting.
This article was edited by Samburaj Das.