 "US Federal Reserve Chairman Jerome Powell. Source: AFP.")
The Federal Reserve announced its final interest rate decision of the year, delivering its third consecutive rate cut of 2024.
The decision comes amid the Fed’s efforts to balance inflation concerns with a slowing labour market in the United States.
The Federal Open Market Committee (FOMC), in its decision released at 2 pm Eastern Time (Thursday, 12:30 am IST), revealed that the benchmark lending rate had been cut by 25 bps or 0.25 per cent.
Policymakers voted 11-to-1 to lower the US central bank’s key lending rate to between 4.25 percent and 4.50 percent, the Fed announced in a statement.
This is the last planned interest rate decision before outgoing Democratic President Joe Biden hands over power to Republican Donald Trump, whose economic proposals involve increasing tariffs and the mass deportation of millions of undocumented workers.
They also penciled in just two quarter-point rate cuts for next year, and sharply hiked their inflation outlook for 2025.
Fed Chair Jerome Powell will be in a press conference at 2:30 pm (Thursday, 1:00 am IST).
What had economists predicted?
Economists polled by FactSet expected the Fed would reduce rates by 25 basis points, continuing a trend that began in September with the central bank’s first rate cut in four years, CBS News reported.
This year’s cuts come as inflation shows signs of easing, though it remains above the Fed’s 2 per cent annual target. November’s Consumer Price Index rose 2.7 per cent, reflecting persistent inflationary pressures.
The Fed has raised rates aggressively since March 2022, pushing its benchmark rate to a 23-year high before beginning reductions this year.
With inputs from agencies