US Federal Reserve Reduces Interest Rate by 50 Basis Points
The US Federal Reserve cut its key lending rate by half a percentage point, the first reduction since the onset of the Covid-19 pandemic. Rates for consumer and business borrowing, including mortgages and credit cards, will decrease. Policymakers aim to control inflation and maintain employment stability amid upcoming elections.
The US Federal Reserve cut its key lending rate by half a percentage point, marking its first reduction since the onset of the Covid-19 pandemic.
This adjustment aims to lower borrowing costs across various forms of credit, including mortgages and credit cards, ahead of the presidential election.
The Fed's rate-setting committee voted 11-1 in favor, with Fed Governor Michelle Bowman advocating for a smaller quarter-point cut.
Policymakers stated that the labor market is cooling and inflation is approaching the 2 percent target.
Affected by the Fed's dual mandate to maintain stable prices and employment, the decision is expected to resonate politically as inflation and the cost of living remain top voter concerns.
This move also raised questions about potential risks of reigniting inflation.
Updated economic forecasts project a 4.4 percent unemployment rate and a 2.3 percent inflation rate by the fourth quarter.