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US Fed Meeting: ‘The US is strong overall. The unemployment rate forecast is 4.2 per cent this year, and 4.3 per cent over the next few years. Inflation has eased significantly over the past two years but remains somewhat elevated relative to our 2 per…Read More
US Federal Reserve Chair Jerome Powell.
US Fed Meeting LIVE: The US Federal Reserve on December 18 announced a cut in the key interest rates by another 25 basis points to 4.25-4.50 per cent. The decision was announced following the two-day FOMC meeting, which concluded on December 18.
While addressing reporters post-policy announcement, US Fed Chairman Jerome Powell said, “The US is strong overall. The unemployment rate forecast is 4.2 per cent this year, and 4.3 per cent over the next few years. Inflation has eased significantly over the past two years but remains somewhat elevated relative to our 2 per cent longer run goal.”
US markets fell slightly after the FOMC rate cut announcement, with the Dow Jones trading lower by 0.25 per cent and the Nasdaq down by 0.56 per cent. However, the US Dollar Index was up marginally by 0.05 per cent to 107.0050.
Ahead of the US Fed decision, the US markets were trading in green with the Dow Jones trading up by 0.35 per cent and Nasdaq was up by 0.25 per cent.
“The Committee decided to lower the target range for the federal funds rate by 1/4 percentage point to 4-1/4 to 4-1/2 percent,” the FOMC said in a statement on December 18.
It is the third rate cut by FOMC in three months, with the first rate cut announced in September (by 50 basis points) and second in November (by 25 bps). The first cut in the current rate cut cycle came in September after a gap of four years.
In the statement, the FOMC said the recent indicators suggest that economic activity has continued to expand at a solid pace.
“Since earlier in the year, labor market conditions have generally eased, and the unemployment rate has moved up but remains low. Inflation has made progress toward the Committee’s 2 per cent objective but remains somewhat elevated,” FOMC stated.
According to the Summary of Economic Projections, US Fed officials reduced their 2025 unemployment forecasts and raised their 2025 inflation projections to 2.5 per cent, up from 2.1 per cent in their September outlook.
Fed projections show two quarter-point interest-rate cuts next year amid rising inflation.
