The decision lowers the federal funds rate from a range of 5.25-5.5%, its highest level in 23 years, to a range of 4.75-5%. “The Committee has gained greater confidence that inflation is moving sustainably toward 2%, and judges that the risks to achieving its employment and inflation goals are roughly in balance,” a statement by the FED said. 

FED Chairman Jerome Powell told reporters on Thursday: "Our economy is strong overall, and has made significant progress towards our goals over the past two years. The labor market has cooled from its overheated state. Inflation has eased from a peak of 7% to an estimated 2.2% as of August. We're committed to maintaining our economy's strength, by supporting maximum employment, and returning inflation to our 2% goal."

"Today, the Federal Open Market Committee decided to reduce the degree of policy restraint, by lowering our policy interest rate by a half percentage point. This decicision reflects our growing confidence, that within appropriate recaliberation of our policy stands, strength in the labor market can be maintained, in the context of moderate growth and inflation moving sustainably down to 2%."

Inflation in the US hit a record high of 9.1% in June 2022, but dropped to 2.5% in August. The FED will hold 2 more policy meetings between now and the end of the year, where it is expected to cut rates again. The first of those meetings will take place immediately after the presidential election on November 5.