This afternoon, by a 9-3 count, the FOMC voted in favor of a 25 basis point reduction in the overnight funds rate, bringing the target range to 3.50%-3.75%. FOMC members have now cut the funds target at each of the last three meetings following a nine-month hiatus and have trimmed the overnight rate by a combined 175 basis points over the past 15 months.

Chicago Fed President Austan Goolsbee and Kansas City Fed President Jeff Schmid voted against the decision, opting to hold rates steady, while Fed Governor Stephen Miran favored a larger 50 bp reduction. Although it was somewhat surprising there weren’t more dissenters, this meeting marked the first time since 2019 that three members voted against the majority.

The official statement, released at the conclusion of the meeting, was little changed from October. Analysts focused on the addition of a few key words to support a widely-expected pause at the January meeting. The phrase in focus was, “In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook and the balance of risks.”

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