USD Struggles Despite Rate Cut Yesterday

The FOMC lowered its benchmark Fed Funds rate by 25-basis points to 4.5%. The accompany policy statement tempered expectations for another rate cut over the remainder of the year, adopting a more neutral stance and emphasizing that risks to inflation and growth are currently balanced. "Economic growth was solid in the third quarter, and strains in financial markets have eased somewhat on balance". Further, the Fed said today's 25-basis point cut, in conjunction with the September ease, "should forestall some of the adverse effects on the broader economy that might otherwise arise from the disruptions in financial markets and promote moderate growth over time". The Fed cited recent increases in energy and commodity prices as "roughly balancing the downside risks to growth". The vote was not unanimous with KC Fed President Hoenig voting in favor of leaving rates unchanged.