The Federal Reserve on Dec. 10 lowered its benchmark lending rate 25 basis points to a range of 3.50% to 3.75%, the lowest since November 2022. There was little stock market reaction to the announcement, which had been anticipated for weeks.
Financial experts think that the two previous recent rate reductions helped lower borrowing costs on credit cards and car loans, but the latest rate cut might be beneficial to the broader lending market and boost home buying. The federal funds rate has a more direct impact on short-term lending, such as credit cards and home equity loans, less so on longer-term fixed-rate mortgages.
Although the Fed decided to drop the benchmark rate by 25 basis points, the vote was not unanimous. Nine committee members voted in favor of the rate reduction. Opposed were Stephen I. Miran, who preferred to lower the target range for the federal funds rate by 1/2 percentage point, and Austan D. Goolsbee and Jeffrey R. Schmid, who wanted no change to the target range for the federal funds rate. Miran has advocated for deeper rate cuts at previous Fed meetings.
In the statement accompanying the decision, the Fed said, “Available indicators suggest that economic activity has been expanding at a moderate pace. Job gains have slowed this year, and the unemployment rate has edged up through September. More recent indicators are consistent with these developments. Inflation has moved up since earlier in the year and remains somewhat elevated.
“The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. Uncertainty about the economic outlook remains elevated. The Committee is attentive to the risks to both sides of its dual mandate and judges that downside risks to employment rose in recent months.”
The U.S. job market has become tighter in recent months with large companies such as Verizon recently announcing job cuts. More than 100,000 federal employees have lost their jobs as the Trump administration has tried to reduce the size of the federal government and cut wasteful spending.
Economic data reports were halted during the government shutdown that began on Oct. 1 and lasted 43 days, the longest in U.S. history.
Total nonfarm payroll employment rose 119,000 in September, little changed since April. The unemployment rate, at 4.4%, changed little in September.
New Jersey’s jobless rate has risen as high as 5% and has been consistently about a half a percentage point higher than the national average.
In September, the Consumer Price Index rose 0.3%, seasonally adjusted, and increased 3% over the last 12 months, not seasonally adjusted.
The 30-year fixed-rate mortgage interest rate was at 6.26% Wednesday, according to Bankrate, slightly higher than the rate on Oct. 29 of 6.18%. Existing-home sales increased by 1.2% in October, according to the National Association of Realtors.
