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US Federal Reserve cuts interest rates: economy is recovering only slowly!
Fed cuts interest rates to strengthen the US economy: Experts expect falling interest rates and weak growth forecasts.
US Federal Reserve cuts interest rates: economy is recovering only slowly!
Signs point to change for the US economy: The American central bank, known as the Fed, recently lowered its key interest rate by a quarter of a percentage point. This decision was made at a recent meeting and the new interest rate is now in the range of 4.00 to 4.25 percent. Loud Cash.ch This is the first interest rate cut since December 2024, when the key interest rate was 4.25 to 4.5 percent.
The reasons for this measure are clear: a weakening labor market and rising inflation rates have prompted the Fed to tweak interest rate policy somewhat. The hope is that lower interest rates can make loans more attractive for businesses and consumers and thus get the economy moving again. Before the cut, the euro was pleasingly high, trading at around $1.18, which makes the cut seem even more relevant.
Economic Outlook
According to current forecasts prepared by the International Monetary Fund (IMF), economic growth of 2.0 percent in 2025 and 2.1 percent in 2026 is expected for the USA. Growth for 2024 is even estimated to be slightly higher, namely 2.8 percent. daily news highlights that the outlook for inflation and the labor market has not fundamentally changed since the last interest rate meeting, which Federal Reserve Chairman Jerome Powell also emphasized.
Despite these positive growth expectations, the situation is tense. An adjustment in interest rate policy shows that the Fed is not quite up to expectations. U.S. employment growth had to be revised downward by 911,000 jobs, which may be a stretch for some companies.
Disagreement within the Fed
An interesting point is the disagreement within the Fed about the future course. In the vote on the rate cut, eleven out of twelve voting members voted in favor, while only Stephen Miran spoke in favor of a larger cut. Miran is viewed by some as not being independent, particularly by Senator Elizabeth Warren, who has repeatedly questioned the central bank's independence.
These developments raise questions: What will the Fed's next move be? And how will the move affect the interest rate landscape in the coming months, especially ahead of the next meeting on October 29, where experts expect a further quarter-percentage point cut?
For U.S. citizens and businesses, it remains exciting to see how the Fed's monetary policy will have a lasting impact on the economy as we monitor current market developments and take stock of the next. One thing is certain: in times like these, it's good to have a feel for the market and price developments.