Financial Market Research Brief

Monetary policy loosens modestly. The Federal Open Market Committee reduced the target range of the federal funds rate by another 25 basis points at its late October meeting. At 3.75 percent, the overnight rate’s lower bound is now the lowest since the end of 2022. The FOMC also indicated they will end quantitative tightening on Dec. 1. From there, proceeds from maturing holdings on mortgage-backed securities on the Federal Reserve’s balance sheet will be directed into Treasury securities. Most Wall Street participants expect the Fed to cut 25 basis points again in December. But that outcome is not certain since the committee’s October decision was not unanimous.