What’s New in the Fed’s December Interest Rate Statement?

There have been some notable differences between the interest rate statement released by the Federal Open Market Committee on Wednesday, following the 25 basis point rate cut, and the previous statement. The first key difference is that the latest statement alluded to the timing and scale of future policy moves, which has sparked market speculation that rates may be held steady at the next meeting.

The Fed’s statement read: “To support these goals, the Committee decided to lower the target range for the federal funds rate by 25 basis points to a range of 4-1/4 to 4-1/2 percent. In determining the pace of future adjustments to the target range, the Committee will assess the incoming data and its implications for the economic outlook, as well as the risks to the outlook.”

The statement also noted that the decision to cut rates was not unanimous, with Federal Reserve Governor Lisa Cook dissenting and preferring to keep rates unchanged. These differences have strengthened expectations that the Fed may pause its rate-cutting cycle at its January meeting.