2024-09-19 01:13:46
It is an unexpectedly clear step: the Fed in the USA has lowered its key interest rate by half a percentage point.
The US Federal Reserve is reacting to the slowdown in inflation and is lowering its key interest rate for the first time in more than four years. The Fed reduced the interest rate on Wednesday by 0.5 percentage points to a range of 4.75 to 5.00 percent. Commercial banks can borrow central bank money at this rate. This is an unusually large interest rate move – the central bank is also signaling further interest rate cuts this year.
The change of course towards a looser monetary policy was expected – but it was unclear whether the central bank of the world’s largest economy would opt for this major jump in interest rates – or take the more cautious path and only lower interest rates by 0.25 percentage points.
The Fed last lowered the key interest rate in March 2020 – to stimulate the economy in the early stages of the corona pandemic. After that, interest rates initially remained at zero – until the Fed began raising rates at a record pace in March 2022 and raised the interest rate to its current level a year ago. In the USA, price increases have recently weakened. This gives the Federal Reserve more room for maneuver to cut interest rates. The European Central Bank had already initiated the interest rate turnaround in June.
The Fed’s new economic forecast now indicates that the central bank is likely to cut interest rates even further this year. The Fed’s decision-makers are expecting an average key interest rate of 4.4 percent for this year (June: 5.1 percent). For the coming year, the Fed is expecting an average key interest rate of 3.4 percent (June: 4.1 percent).