On November 7, the Fed lowered rates a quarter point, its second cut in as many months, signaling that the primary concern has shifted from bringing down inflation to shoring up a slightly softening labor market. The combined 0.75% cuts bring the fed funds rate target range to 4.5% to 4.75%.

The recent cuts may have some donors and CGA issuers wondering whether a change to ACGA’s Suggested Maximum Rate Schedules will be warranted in the nearer term. 

ACGA’s Rate Setting & Regulations Committee closely monitors Fed policy, along with other important factors—including the actual interest rate paid on Treasury securities, and the 10-year Treasury yield. While the Fed has begun lowering its benchmark rate, the yield on the 10-Year, 30-year fixed mortgages, and other longer duration debt instruments have not followed suit—and in fact moved up after both Fed cuts. Therefore, ACGA is not making a change to the Suggested Maximum Rate Schedules at this time.

While many observers may focus on the Fed’s headlined grabbing moves, ACGA’s proven processes take a view moderated by attention to actual rates over a multi-month time frame. ACGA will continue to monitor Fed activity, bond yields, and other economic and market factors as it considers the appropriateness of its current rate guidance.