The Federal Reserve cuts rates again amid employment risks: The Federal Open Market Committee lowered its interest rate target range by 25 basis points to 3.75%–4.00% at its October meeting. In a change to its previous statement, the FOMC noted that inflation has moved up some since earlier this year, but available indicators suggest that economic activity continues to expand at a moderate pace. Nonetheless, the committee judged that downside risks to employment warranted an additional cut to its interest rate target.
Why it matters: For the past three quarters, lending standards have gotten tighter on net for commercial and industrial loans. Although the Federal Reserve started its rate-cutting cycle again in September, Federal Reserve Chairman Jerome Powell expressed that policymakers now bring “strongly different views about how to proceed,” a sign that lending standards may ease slightly but not substantially for manufacturers in the months to come.
Texas manufacturing activity continued to expand in October: The production index in the Eleventh District was unchanged from September at 5.2, remaining below the average of 9.6. Meanwhile, other measures posted mixed results for the month. The new orders index inched up 0.9 points to -1.7. Capacity utilization fell 5.0 points to -1.1, while shipments declined 0.9 points to 5.8.
What it means: As measures for manufacturing activity in the Eleventh District were mixed in October, the outlook for future manufacturing activity weakened but remained positive. The future production index fell 10.6 points to 21.0. Meanwhile, the future general business activity index and future company outlook index both stepped down, declining to 7.0 and 7.1, respectively, indicating that activity will likely remain stable but positive.
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