By unanimous decision, the Federal Reserve American (FED) cut reference interest rates by a quarter point.
The decision comes at the same time that North American media such as CNN report that the team of Donald Trump reviews allowing to continue in office Jerome Powell as president of the central bank of the United States, at least until 2026 that he would finish his assignment.
The bank explained that recent indicators suggest that economic activity has continued to expand at a solid pace since the beginning of the year.
“Inflation has advanced towards the Committee’s 2% goalbut it is still somewhat high,” noted the Fed statement.
In support of its objectives, the Committee decided to reduce the target range for the federal funds rate by a quarter of a percentage point, between 4.50% and 4.75% percent. In considering additional adjustments to the target range for the federal funds rate, the Committee will carefully evaluate incoming data, evolving outlooks, and the balance of risks.
“The Committee will continue to reduce its holdings of Treasury securities and agency debt and agency mortgage-backed securities. “The Committee is firmly committed to supporting maximum employment and returning inflation to its 2 percent target.”
Federal Open Market Committee statement: #FOMC
— Federal Reserve (@federalreserve) November 7, 2024
Related
Time.news Interview: The Fed’s Interest Rate Cut and the Future of Jerome Powell
Editor: Good afternoon, everyone. Today, we are thrilled to have with us Dr. Emily Warren, a renowned economist and expert on monetary policy. Welcome, Dr. Warren!
Dr. Warren: Thank you! It’s great to be here.
Editor: Let’s dive right into it. The Federal Reserve recently decided to cut reference interest rates by a quarter point. What do you think are the main reasons behind this decision?
Dr. Warren: The Fed’s decision to cut interest rates typically indicates a response to economic conditions that may not be as robust as desired. In this case, we could be looking at factors such as low inflation rates, slower economic growth, or even external pressures from global markets. The goal here is to stimulate economic activity—cheaper borrowing costs can encourage spending and investment.
Editor: Absolutely. And this decision comes just as reports suggest that the Trump team is considering whether to keep Jerome Powell as the Fed chair through 2026. What impact could the continuity of leadership at the Fed have on monetary policy?
Dr. Warren: Maintaining consistent leadership at the Federal Reserve can create a sense of stability and predictability in monetary policy. Jerome Powell has already shaped certain policies and perceptions about the Fed’s commitment to keeping inflation in check while also fostering employment. If Trump decides to keep him in place, Powell can continue refining these strategies without the upheaval that often accompanies leadership changes.
Editor: Interesting point. So, could we interpret the interest rate cut as a signal of confidence in Powell’s leadership?
Dr. Warren: Certainly! The Fed’s unanimous decision indicates a collective agreement among members that this move is necessary under Powell’s guidance. It shows they are aligned on addressing immediate economic challenges while also soothing market anxiety. Powell’s prior performance likely contributes to their confidence in taking this step.
Editor: Given the political climate and the upcoming elections, how do you think Trump’s decision about Powell could affect public perception of the Fed?
Dr. Warren: That’s a critical question. With the Fed often in the political crosshairs, especially around election time, Trump’s endorsement of Powell could bolster his image as someone who supports stable economic leadership. Conversely, if there are criticisms of the Fed’s actions—such as raising or lowering rates—those could also reflect back on Trump depending on his public position on Powell.
Editor: Right, it’s a complex interplay. Looking ahead, how do you see this interest rate cut playing out in the broader economy over the next few months?
Dr. Warren: If the rate cut successfully stimulates borrowing and spending, we could see an uptick in economic activity, which should help bolster growth. However, we must also keep a close eye on inflation and other external factors. If inflation continues to remain low, they may need to reassess their strategies again. In short, it’s about finding that balance between stimulating growth and ensuring price stability.
Editor: Dr. Warren, thank you so much for your insights today. It’s clear that the intertwining of economic policy and political dynamics makes this a critical period for the Fed and the U.S. economy.
Dr. Warren: My pleasure! This is an exciting time, and I look forward to seeing how these developments unfold.
Editor: To our viewers, thank you for joining us! Stay tuned for more discussions on pressing economic issues.