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Federal Reserve policymakers have unanimously agreed to reduce interest rates by 25 basis points to a range of 4.5%-4.75%, according to minutes from their November meeting released Wednesday. This move reflects their growing confidence that inflation is steadily moving toward the Fed's 2% target.

The central bank's decision is supported by several factors that are expected to maintain downward pressure on inflation. These include diminishing business pricing power, the Fed's restrictive monetary policy stance, and well-anchored long-term inflation expectations. However, despite these positive signs, core inflation measures—which exclude the volatile costs of food and energy—remain somewhat elevated.

Despite the recent rate cut, the market reaction has been muted. Fed futures continue to price in a 59% chance of another rate cut in December, and the 10-year Treasury yield has remained steady at 4.32%.

Economic data presented at the meeting highlighted stronger-than-expected growth in consumer spending and overall economic activity, underpinned by a solid labor market, rising real wages, and elevated household wealth. Participants acknowledged these robust economic indicators but underscored the importance of closely monitoring the labor market for any signs of softening, which could influence future policy decisions.

The meeting minutes also revealed varying perspectives on the next steps for monetary policy. Some participants suggested the possibility of pausing the rate cuts if inflation proves to be more persistent, while others indicated that an accelerated easing could be warranted if economic conditions, such as a downturn in the labor market or a significant slowdown in economic activity, were to deteriorate.

The release of these minutes had little impact on short-term interest rate markets, with Fed funds futures still suggesting a 59% probability of another 25-basis-point rate cut in December. The U.S. dollar index showed minimal change, gaining 0.2% on the day, while the S&P 500 index saw a slight gain of 0.3%.

Overall, the Fed remains cautiously optimistic about the trajectory of inflation but acknowledges that core pressures remain and uncertainties persist in the economic landscape.