Fed's Open Market Committee Cuts Policy Rate By 1/4 Point

Despite a relatively upbeat overall economic assessment, the Federal Reserve as expected cut its policy rate by an incremental 25 basis points to a range of 1.50 percent to 1.75 percent with an implied midpoint of 1.625 percent. The vote was 8 to 2 with Ester George of the Kansas City Fed and Eric Rosengren of the Boston Fed once again dissenting for no change, just as they have at each of the last three meetings all of which have produced a 25-basis-point rate cut.

Yet the need to cut rates isn't underscored in the economic assessment. The labor market is once again described as strong and economic growth as moderate and with household spending once again said to be rising at a "strong pace". Business investment has been the sore point but today's assessment is no worse than in September, once again described as "weak" with exports, another trouble spot, once again also described as "weak". Inflation is once again said to be "running below" the Fed's 2 percent target.

But it is weakness in business investment, the result in part of slowing global demand for US exports, that's at the heart of the Fed's efforts to stimulate growth, that also the need to lift inflation back to their 2 percent target. Following its move to add temporary liquidity earlier this month, the Fed announced no new repo programs or balance sheet plans. Jerome Powell is up next at the post-meeting press conference.