Mega Event Announcement: Federal Interest Rates to Drop at 8:00 PM Tonight - A Preview
The U.S. Federal Reserve (Fed) is set to announce a rate cut tonight at 8 PM CET, marking a significant shift in monetary policy that has been under pressure from President Donald Trump.
The Fed's decision comes after refraining from cutting rates all year due to fears of inflation. However, recent developments have led the central bank to reconsider its stance. According to economists surveyed by Bloomberg News, the Fed is expected to project two interest rate cuts for the rest of 2021, with an additional cut expected to follow either in October or December.
The rate cut is expected to be a 0.25 percentage point decrease from the current range of 4.25% to 4.50%. This decision, however, is not without controversy. Differences of opinion over the expected quarter-point cut exist among Fed decision-makers, with some advocating for a stronger cut and others preferring to maintain interest rates.
The exact composition of the Federal Open Market Committee (FOMC) responsible for setting rates is unusual and has dominated the news ahead of the meeting. Christopher Waller and Michelle Bowman, two Fed governors appointed by Trump, voted against the decision in July to keep interest rates unchanged. If three representatives vote against the decision, this would be the first time since September 2019 that more than two representatives have voted against a rate decision.
If President Trump succeeds in replacing Lisa Cook, whose term on the Fed board expires in 2038, this could influence the longer-term development of interest rates. Cook, a Fed Governor, has been allowed to continue working at the central bank while her legal battle against Trump's dismissal attempt continues.
Stephen Moore, nominated by President Trump for a vacant seat on the Fed, was sworn in just in time for the meeting. His presence on the committee could potentially sway the vote in favor of a rate cut.
The new forecasts will also show how the decision-makers assess the development of inflation and unemployment. Inflation remains above the target, but the impact of tariffs on final prices has been more moderate than originally feared, according to economists.
Following the rate decision announcement, Fed Chair Jerome Powell will give a press conference at 8:30 PM CET. Investors will scrutinize the new economic projections for signs of the likely path of interest rates in the coming months. The shift in monetary policy is under pressure from President Donald Trump, who has been pushing for a 'significant cut' in rates. However, the Fed's decision will be based on its assessment of the economic outlook and the potential impact on the U.S. economy.
A significant minority of surveyed economists expect Fed decision-makers to project three interest rate cuts for 2025. However, the immediate focus remains on the upcoming rate cut and the potential implications for the short-term economic outlook. The Fed's decision to cut rates is a response to the current economic conditions and reflects the uncertainty about the economic outlook in the new growth forecasts. Both Waller and Bowman are concerned about the labor market, as employment growth in the U.S. has slowed significantly since that meeting.
The Fed's new forecasts will show how much easing the officials expect for the next year. The shift in monetary policy is a response to the current economic conditions and reflects the uncertainty about the economic outlook in the new growth forecasts. The Fed's decision to cut rates is a significant move that could have far-reaching implications for the U.S. economy.
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