The American central bank Federal Reserve (Fed for short) lowered interest rates by 0.25 percentage points after the American presidential elections. The policy interest rate range will be lowered to 4.50 to 4.75 percent, she announced in Washington on Thursday.
The decision was unanimous. Bank economists had largely expected interest rates to be cut by a quarter of a percentage point. Fed Chairman Jerome Powell said the US labor market has cooled overall.
In mid-September, the Fed cut key interest rates by 0.50 point. This was the first decline since the great wave of inflation.
Interest rates still above the desired inflation target
Inflation fell to 2.4 percent in September. In 2022 this was sometimes more than nine percent. However, interest rates are currently still above the Fed’s inflation target of two percent.
By way of exception, the interest rate meeting took place on Thursday. It was postponed a day due to the presidential elections. Donald Trump’s election victory will probably also be a topic at the press conference with Fed Chairman Powell.
Investors have recently been preparing for the end of interest rate cuts in the middle of next year and for the key monetary policy rate to fall into a range of 3.75 to 4.00 percent. This can cause inflammation.
During his first presidency from 2017 to 2021, Trump openly called for low interest rates and even called Powell an “enemy” because he said rate hikes by the independent Federal Reserve unnecessarily slowed growth.
Trump promoted Powell to chairman of the Fed in early 2018. Outgoing US President Joe Biden granted him a second term until May 2026, which Powell said he wants to complete.
Source: Krone
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