Federal Reserve expresses satisfaction as Donald Trump cuts interest rates
Fed Cuts Interest Rates Amid Challenging Economic Conditions
The US Federal Reserve (Fed) has made a move to support the economy by reducing the interest rate for the first time this year. In a decision that was widely anticipated, the Fed lowered the interest rate by 0.25 percentage points to a range of 4.00 to 4.25 percent.
The decision comes amidst a challenging economic situation, as described by Fed Chair Jerome Powell. The central bank has revised its growth forecast for the year, raising it from 1.4 to 1.6 percent. However, recent employment figures have fallen short of expectations, and the Fed had to weigh a slowing US economy against rising inflation in their decision.
Inflation has strengthened recently, with consumer prices rising by 2.9 percent year-on-year in August, up from 2.7 percent in July. Part of this increase can be attributed to import tariffs.
The Fed's decision to cut interest rates is aimed at countering the slower economy growth. The central bank has indicated that further interest rate cuts might be on the cards by the end of the year, with up to two rate cuts possible.
Despite President Donald Trump's repeated demands for interest rate cuts and criticism of Fed Chairman Jerome Powell, the central bank has maintained its independence. Trump has been in conflict with Powell, who has not met his calls for further rate reductions.
The interest rate, before the recent cut, had been in the range of 4.25 to 4.5 percent since December 2024. The last time the US central bank reduced interest rates was in that same month.
In a separate development, the Fed has cleared Director Cook in an alleged fraud affair.
The Fed's interest rate decision has had a positive impact on US stocks. The Dow Jones Index reached a new record high during trading, with stocks rising in response to the decision.
The Fed's two percent target for inflation is being exceeded, and the central bank will likely continue to monitor inflation closely in the coming months. The Fed's decision to cut interest rates also comes at a time when the chairperson, Jerome Powell, is under pressure from the President. Despite this, Powell has advocated a more restrictive course, citing concerns about inflation.
In conclusion, the Fed's decision to cut interest rates is a significant move aimed at supporting the economy amid challenging conditions. The central bank will continue to monitor the economy closely and adjust its monetary policy as necessary.
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