Federal Reserve Cuts Federal Funds Rate By 25 Bps

On November 7, 2024, Fed released FOMC Statement. The central bank decided to lower the target range for the federal funds rate by 25 bps to 4.50% – 4.75%.

Fed noted that inflation has made progress towards the 2% target but remained somewhat elevated.

According to Fed, the risks to achieving employment and inflation goals are roughly in balance. The central bank noted that the economic outlook remained uncertain and that Fed was focused on the risks to both sides of its dual mandate.

Notably, Fed will continue to reduce its holdings of Treasury securities, agency debt and agency mortgage-backed securities. Such sales put some pressure on the debt market and make Fed’s policy less dovish.

Treasury yields moved away from session lows as traders reacted to Fed Interest Rate Decision. The yield of 2-year Treasuries settled near the 4.23% level, while the yield of 10-year Treasuries moved above 4.35%.

U.S. Dollar Index moved back above the 104.50 level after the release of Fed decision. Traders should note that Powell’s press conference starts soon, and U.S. dollar will be sensitive to Fed Chair’s comments.

Gold pulled back after an unsuccessful attempt to settle above the $2700 level as traders focused on the rebound of the U.S. dollar.

SP500 settled near 5975 as traders remained bullish. In the near term, Trump’s victory is a bigger catalyst compared to Fed policy outlook, although Powell’s comments may have a material impact on SP500 dynamics today.

For a look at all of today’s economic events, check out our economic calendar.