US Federal Reserve Chairman Jerome Powell-led Federal Open Market Committee (FOMC) on Wednesday cut the key benchmark rate by 25 basis points, bringing it down to the 3.75-4.00 per cent range.Experts had widely anticipated that the Federal Reserve’s rate committee will largely support a 0.25 percentage point reduction.The rate reduction will strengthen the US economy, which continues to adjust to President Donald Trump‘s tariff policies, whilst providing officials additional time to assess the government shutdown’s impact.The political impasse between Republicans and Democrats continues nearly a month into the shutdown, resulting in the temporary cessation of most official statistical releases.The Federal Reserve operates independently with two primary objectives: managing inflation and unemployment rates through adjustments to its primary lending rate, whether increasing, maintaining, or decreasing it.Reduced rates encourage economic and employment growth, typically resulting in lower mortgage costs. Conversely, increased rates restrict economic activity and control inflation.According to an AFP report, recent statements from Federal Reserve officials indicate growing worry about employment market deceleration, prompting them to prioritise job creation despite inflation exceeding their target rate.Additionally, there remains ongoing tension regarding Trump’s efforts to influence Federal Reserve operations, alongside Treasury Secretary Scott Bessent’s public initiative to identify Powell’s successor when his chairmanship concludes in May.
US Federal Reserve cuts rate by 25 basis points; Jerome Powell-led FOMC says uncertainty about economic outlook remains elevated
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