(The Center Square) – The Federal Reserve confirmed a quarter-point interest rate cut on Thursday, lowering the target range from 4.5% to 4.75%, the second cut made in 2024.
The Federal Reserve's decision to cut rates reflects the ongoing strategy to balance economic growth and inflation control. The cut is intended to maintain economic momentum as inflation nears the Fed's targeted goal of 2%.
Chairman Jerome Powell confirmed the cut at a press conference. He emphasized that the decision is meant to support the economy as inflation continues to moderate.
Powell said the cut was to encourage borrowing and spending without sparking a new wave of inflation. Inflation is 2.4% yet considerably lower than the 9.1% of June 2022 that was highest in 40 years.
"We're carefully navigating a balance to sustain economic momentum without reigniting inflation," Powell said.
Monetary policy is known as "restrictive" because it sets interest rates high enough to slow economic activity while curbing inflation. By lowering borrowing costs, the Federal Reserve is aiming to stimulate consumer spending and business investment, which are both essential to the economy's growth.
Real Gross Domestic Product grew 2.8% at an annual rate in the third quarter of 2024, according to the latest Bureau of Economic Analysis data. This is down slightly from the reported 3% in the second quarter.
The central bank would continue its gradual approach, with Powell suggesting another possible cut in December, depending on whether inflation and employment metrics shift.
The Federal Reserve is independent of politics, with no mention of the recent election or answers to how President-elect Donald Trump's policies will or could impact current numbers.
Powell said the election has no effect on policy decisions. Powell said that the indicators suggested that economic activity continued to expand at a solid pace and that inflation has made progress toward the committee's 2% objective but remains somewhat elevated from the peak of 7% to 2.1% as of September.
Separate of the Federal Reserve, the immediate impact financially of Trump’s win was the biggest gain for the dollar in eight years and record highs on Wall Street. Bitcoin also surged, a campaign promise surely fueling the cryptocurrency market.
Powell said he feels next year could be stronger than this year.
Inflation has been decelerating over the last two years, but these actions come amid global economic uncertainties and a complex post-pandemic environment.
"It takes some years of real wage gains for people to feel better," Powell said. "That's what we're trying to create. And I think we're well on the road to creating that."
The next Federal Open Market Committee meeting is scheduled for Dec. 18.
News magazine bootstrap themes!
I like this themes, fast loading and look profesional
Thank you Carlos!
You're welcome!
Please support me with give positive rating!
Yes Sure!