In a move hinted at some two months ago, the Federal Reserve has announced that it is cutting interest rates by a quarter of a point, landing in the 4.5% to 4.7% range.
In making the announcement, the Board of Governors of the Federal Reserve System said that it has sought to “achieve maximum employment and inflation at the rate of 2% over the longer run,” in anticipating a lower rate.
In so doing, the agency’s Federal Open Market Committee decided on a lower rate, with the promise of another reduction to be based on “incoming data, the evolving outlook, and the balance of risks.”
In making its latest rate adjustment, the Committee noted that compared to where things stood earlier this year, “labor market conditions have generally eased, and the unemployment rate has moved up, but remains low.”
The interest rates are what banks charge each other in lending, rates that also have an impact on auto loans, credit cards, and mortgages.
While the Fed move was expected, notes the Wall Street Journal, the Governors Board “signaled a little more uncertainty over how quickly it would continue lowering rates as it seeks to prevent large rate increases of the prior two and a half years from unnecessarily slowing the economy.”
In a statement, Robert Dietz, chief economist with the National Association of Home Builders, remarked that despite the rate reduction, the Fed did not issue any guidance on the “pace and ultimate path for future interest rate cuts.”
Noting the impact of the 2024 presidential election, probable economic growth, and increasing government deficits, Dietz added that the Fed will “need to recalibrate its economic policy and policy outlook given the large number of changes that markets have digested in just the past week alone.”
The Fed announcement comes as reports in the media have suggested that President-Elect Trump may be thinking of asking Federal Reserve Chairman Jerome Powell to step down. In an August press conference, Trump remarked that he thought he “should have at least a say” in the doings of the Governors Board.
Powell, who was nominated by Trump in 2017 to lead the Federal Reserve board, told reporters on November 7 that he had no intention of stepping down before his term is completed in 2025.
November 11, 2024
By Garry Boulard
