The Federal Open Market Committee voted unanimously to reduce the federal funds rate by 25 basis points at its November 2024 meeting, setting a new target range of 4.50% to 4.75%. The 12-0 decision, announced on 7 November 2024, continued the easing cycle that the FOMC had begun at its preceding meeting.
The decision came two days after the United States presidential election.
THE EASING CYCLE
The rate-cutting cycle followed a tightening that brought the funds rate from near-zero to over 5% over the course of 2022 and 2023. That tightening cycle was designed to bring inflation, which reached multi-decade highs, back towards the FOMC's 2% target.
The 25 basis point cut followed a 50 basis point reduction at the September 2024 meeting, when the easing cycle began. Chair Jerome Powell and his colleagues have emphasised that they are not on a predetermined path and will respond to the data as it arrives.
CENTRAL BANKS WITH DOLLAR PEGS
Several central banks, particularly those whose currencies are pegged or closely linked to the US dollar, adjust their own policy rates in parallel with Fed moves. The Central Bank of the UAE, for example, reduced its own benchmark rate on the same day, tracking the Federal Reserve's action as it has done throughout the current monetary cycle.
The Federal Reserve published its full statement on its website following the decision.
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