The Fed lowered the base rate again: to 4.5-4.75%

Following the results of the next meeting, the US Federal Reserve System (FRS) lowered the base interest rate by 25 basis points, to a range of 4.5-4.75%. This is the second rate cut this year, and the decision was made unanimously by all members of the Open Market Committee (FOMC).

Highlights:

• The economy continues to grow at a steady pace, despite signs of a slowdown in certain sectors.

• Inflation is moving towards the 2% target, but still remains slightly above the desired level.

• The labor market has weakened, but the unemployment rate remains at historically low levels, which supports economic activity.

• The Fed emphasizes that the goals for maximum employment and inflation remain unchanged, while the risks to the economy are balanced.

Expectations and plans:

The Committee is ready to continue to adjust policy in case of new risks that may hinder the achievement of long-term inflation and employment targets. The next meeting is scheduled for December 17-18, 2024, when updated macro forecasts will be presented.

The rate cut is an attempt to stimulate economic activity in the face of slowing growth and a desire to keep inflation under control. From July 2023 to September 2024, the Fed kept the rate at the highest level in the last 20 years at 5.25-5.5%, but now, apparently, it is ready for a more flexible approach.