In light of the progress on inflation and the balance of risks, at today's meeting the committee decided to lower the target range for the federal funds rate by a half percentage point to 4.75-5 percent. This recalibration of our policy stance will help maintain the strength of the economy and the labor market and will continue to enable further progress on inflation.
The reduced interest rate will make borrowing more affordable and is intended to stimulate investment, ideally increasing the number and quality of available jobs.
A rate cut this close to an election is unusual, according to an analysis by Reuters. The economic stimulus provided by a rate cut may create a more vigorous economy going into November.
Markets reacted positively to the news, with the DJA, S&P 500 and NASDAQ all hitting daily highs after the announcement.
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