For the first time since 2020, the Federal Open Market Committee (FOMC) approved a cut of 50 basis points in the target federal funds rate — to a new range of 4.75 percent to 5.0 percent — at its meeting in September, citing an “uncertain” economic outlook, as it moves to balance its goals of high employment and low inflation.
The FOMC “has gained greater confidence that inflation is moving sustainably toward 2 percent, and judges that the risks to achieving its employment and inflation goals are roughly in balance,” according to a Sept. 18 statement.
While a rate cut was widely expected, the Fed came in at the higher side of the potential range of possibilities, reflecting a bolder action to combat economic weakening.
The Pew Charitable Trusts points out one of the most immediate impacts of lower rates will be lower borrowing costs for state and local governments seeking to finance critical projects, particularly infrastructure, and make other long-