Why the US is cutting interest rates

Finally it happens.

After US President Donald Trump’s economic debate and assembly attacks, the US Central Bank reduced interest rates on Wednesday.

Federal Reserve, the key loan rate reduced the target 0.25 percent points, he said. This will be between 4 and 4.25%, the lowest level since the end of 2022.

The first ratio deduction since last December of the Bank – is expected to start a number of additional discounts in the coming months, which will help reduce borrowing costs throughout the US.

However, today’s movement has a warning about the economy and a stopping in the FED reflects the increasing unity of consensus that the labor market needs an increase in the form of lower interest rates.

“Unemployment is still low but we see negative risks,” Federal Reserve President Jerome Powell said at a press conference after the announcement. He said.

This describes the labor market as “solid” compared to the July update of the Fed.

On Wednesday, the slaughter was supported by 11 of the members who voted in the FED’s committee. Stephen Miran, a temporary leave of Trump’s Economic Consultants Committee, voted for a larger percentage point outage.

In many ways, it is not surprising to cut the FED, which sets an independent interest policy from the White House.

Inflation, which disintegrated the economy after pandemic and encouraged the bank to increase interest rates in 2022, decreased significantly.

Britain, Europe, Canada and elsewhere, while the central banks have already responded with lower rates, the Fed’s own policy makers have been expecting to reduce their borrowing costs for months this year.

At the FED’s last meeting, two members of the Board supported even a deduction.

Other members are more concerned that Trump’s economic policies, including tax cuts, tariffs and mass perceptions of migratory workers, may cause inflation to shine again.

And in recent months, it is true that the US has seen that inflation is higher. Prices have increased by 2.9% from 12 months to August, which is the fastest tempo since January, and is still over 2% of the Fed.

However, in recent weeks, these concerns have remained in the shadow due to weakness in the labor market. The United States reported that inadequate business gains in August and July and that it was clearly a loss in June – since 2020, this kind of first decline.

Wells Fargo Senior Economist Sarah House, waiting for the rates to decrease by 0.75 points by the end of the year, Sarah House, “We really come to see in the business market – the deterioration we see in the last few months.” He said.

“The Fed knows that it turns very quickly when the labor market returns, so they want to make sure that the labor market is already slowing down and not pressing the economy.”

At the news conference following the announcement, Powell stressed that the unemployment rate remained low by 4.3%and accepted unusual disputes among the members.

FEDs published by the FED, the Fed’s interest rates may reduce the additional percentage percent of this year, suggesting.

However, seven members do not need more discounts, while analysts are probably Miran, they think that the rate should fall below 3%.

“This is not a bad economy – we have seen much more challenging times.” He said. “But in terms of politics, it’s hard to know what to do. There is no risk -free way right now.”

It is unlikely that the movement of Wednesday will satisfy the president who spent for months to explode the hesitation of the Fed’s rates.

On social media, Powell called Powell a real puppet ve and accused the interest rates of keeping the economy back, leaving his interest rates for a very long time.

“Too late” should reduce interest rates and should be greater than in mind. Housing will rise !!! “Trump refers to Powell and wrote in a social media post before the meeting.

Trump’s pressure is not just rhetoric. After a short -term gap was opened last month, he quickly moved to establish Miran on time for this week’s meeting.

The administration also threatened Powell with fire and investigation, and was locked in a legal war due to an effort to ignite Economist Lisa Cook, another member of the board of directors.

According to critics, Trump’s moves mean an attack on the independence of the Fed, which has not recently seen.

Powell spent most of his news conference on whether he had accepted.

For example, if he sees the fight against Cook as a threat to the independence of the bank, he replied: “I see this as a court case, I think I think it would be inappropriate to comment.”

However, at the Fed meeting of this week, no matter what the oddity in the air, the analysts say that the FED’s decision will come without looking at Trump’s campaign.

B. Riley Wealth Chief Sunday Strategist Art Hogan, “The president’s policies are definitely causing economic activities that pushed the Fed’s hand.” He said.

He continued: “The President’s Fed’s jaw for lower rates, I think I think it has a zero effect.”

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