The latest FOMC meeting revealed a divided committee, even as the Fed delivered a 25 bps rate cut. The decision passed with a 9:3 vote, highlighting significant disagreement within the central bank:
- Two hawkish dissents preferred no rate cut
- One dovish dissent pushed for a 50 bps cut
Fed to Resume Treasury Bill Purchases
Alongside the policy decision, the Federal Reserve announced that it will resume buying Treasury bills, beginning at the end of this week, adding liquidity to the financial system.
Fed at a Policy Crossroad
The central bank faces a challenging environment:
- On one hand, the labour market is softening, warranting policy support
- On the other, inflation remains uncomfortably high, demanding caution
Fed Chair Jerome Powell noted that the rate cut reflects growing job market risks, even as inflation pressures remain tilted to the upside. The Fed’s balancing act underscores the complexity of navigating economic stability amid conflicting signals.
