Fed Wrap – Fed Kicks off with 50bp Cut

Ryan Weldon, from IFM’s Debt Investments Team in New York, features in our Fed Wrap Market Update videos discussing central bank themes in debt markets, with a particular focus on the US Federal Reserve (Fed).

In this edition, Ryan discusses the outcomes of the September Fed meeting, the key points from the press conference and what to watch ahead of the next meeting.

At the September meeting, the Federal Reserve cut rates by 50bp, lowering the upper band of their policy rate to 5% with one dissenting vote in favor of a 25bp cut. The main changes to the statement focused on how job gains have slowed, rather than moderated, and how inflation has made “further” progress but remains elevated. The Fed have gained greater confidence that inflation is moving sustainably towards their 2% target, however, they additionally noted that they are strongly committed to supporting maximum employment. The message from the statement and the large cut is that the Fed believe they are achieving their goal on inflation and want to shift to a more balanced approach that considers both the inflation and employment aspects of their dual mandate.