US Fed lowers interest rates by 0.5 bps to 4.75-5%

19 Sep '24

2 min read

US Fed lowers interest rates by 0.5 bps to 4.75-5%

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US Fed has lowered the federal funds rate by 0.5 percentage points to 4.75-5 per cent, citing progress on inflation, though it remains above the 2 per cent target.
The FOMC noted steady economic growth, slower job gains, and a slight rise in unemployment, while expressing confidence that inflation is moving towards its goal.
The Fed remains cautious about the economic outlook.

The US Federal Reserve (Fed) announced a decision to lower the target range for the federal funds rate by 0.5 basis points (bps), bringing it down to 4.75 to 5 per cent. This move follows continued signs of progress on inflation, although it remains slightly above the Federal Reserve's long-term target of 2 per cent.

In its latest statement, the Federal Open Market Committee (FOMC) noted that the economy continues to expand at a steady pace, though job gains have slowed, and the unemployment rate has edged up, albeit remaining low by historical standards. The Committee expressed increased confidence that inflation is sustainably moving toward its 2 per cent goal, though it acknowledged that inflation remains somewhat elevated.

The decision comes as the Federal Reserve balances its dual mandate of maximum employment and stable inflation. While inflation is making progress, the economic outlook remains uncertain. The Committee will closely monitor incoming data to assess whether further adjustments to the federal funds rate are necessary.

In addition to the rate cut, the Federal Reserve remains committed to reducing its holdings of Treasury securities, agency debt, and mortgage-backed securities as part of its broader monetary policy strategy, the FOMC statement further stated.

The Federal Reserve’s next steps will be informed by economic data and developments in labour market conditions, inflation, and financial and international factors.

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