US Fed cuts interest rates by 25 basis points, monetary policy continues to ease

New Delhi| The US Federal Reserve has cut the policy interest rate by 25 basis points with the aim of supporting economic stability. The latest decision by the Federal Open Market Committee (FOMC) has lowered the federal funds rate target to a range of 4.5 percent to 4.75 percent. According to Fed Chairman Jerome Powell, the move reflects the Fed’s commitment to promoting sustainable economic growth and moving inflation toward the Fed’s long-term 2 percent target.

“Today the FOMC decided to take another step in reducing the degree of policy restraint by lowering our policy interest rate by a quarter of a percentage point”, Powell said “We are confident that with a proper re-evaluation of our policy stance, the strength of the economy and the labor market can be maintained and inflation can be brought down permanently to 2 percent”, he said. We’ve also decided to continue scaling down our security solutions”

Recent indicators show solid economic growth, as well as stable, though slightly restrained, expansion in labour market conditions. The unemployment rate has risen moderately, but remains relatively low, indicating a generally healthy job market. Inflation, although improved, has not yet fully reached the Fed’s target, indicating that the central bank is striking a delicate balance when adjusting its monetary policy.

The Committee stressed that it was focused on achieving maximum employment and stable, low inflation in the long run. The Fed has acknowledged uncertainties in the economic outlook and potential risks to both its employment and inflation targets. The FOMC highlighted that it will closely monitor data on labor markets, inflationary pressures and international developments.

Looking to the future, FOMC indicated that it would carefully consider additional adjustments to the federal funds rate based on emerging economic conditions and potential risks to its dual mandate. The Committee reaffirmed its dedication to bringing inflation back to its 2 per cent target and supporting maximum employment, and reiterated that it was prepared to revise the policy if necessary to keep progress on track. The Fed’s latest interest rate cut reinforces its flexible and cautious approach, as it aims to boost a resilient U.S. economy amid a changing economic landscape.