Washington: The US Federal Reserve cut its key lending rate by half a percentage-point Wednesday in its first reduction since the pandemic, sharply lowering borrowing costs shortly before November’s presidential election.
Policymakers voted 11-to-1 in favour of lowering the US central bank’s benchmark lending rate to between 4.75 per cent and 5.00 per cent, the Fed announced in a statement.
They also pencilled in an additional half-point of cuts before the end of this year, and an added percentage point of cuts in 2025.
The Fed’s decision will affect the rates at which commercial banks lend to consumers and businesses, bringing down the cost of borrowing on everything from mortgages to credit cards less than two months before the US presidential election.
The Fed said its rate-setting committee “has gained greater confidence that inflation is moving sustainably toward 2 per cent, and judges that the risks to achieving its employment and inflation goals are roughly in balance.”
The central bank has a dual mandate from Congress to act independently to tackle both inflation and employment. In updated economic forecasts published alongside the Fed’s rate decision, policymakers’ median forecasts pointed to an unemployment rate of 4.4 per cent, on average, in the fourth quarter of this year, up from 4.0 per cent in the last update in June.
Officials also pencilled in an annual headline inflation rate of 2.3 per cent, slightly lower than in June.
Policymakers voted 11-to-1 in favour of lowering the US central bank’s benchmark lending rate to between 4.75 per cent and 5.00 per cent, the Fed announced in a statement. Business Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
