In the second cut of 2024, the Federal Reserve lowered interest rates by 0.25 percentage points. This highly anticipated move provides relief to millions of Americans struggling with the cost-of-living crisis and inflated borrowing costs.
The Fed’s latest interest rate cut reduces the rate banks charge each other for short-term loans — from 4.5% to 4.75%. The Federal Reserve’s November 7 press release announcing the interest rate cut read: “In support of its goals, the Committee decided to lower the target range for the federal funds rate by 1/4 percentage point to 4-1/2 to 4-3/4 percent.”
The Fed recognized that the economy has remained robust, despite its struggles. “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 progressed toward the Committee’s 2 percent objective but remains somewhat elevated.”
The Fed said its goal is for the economy to land softly without causing a recession. It aims to achieve maximum employment and inflation at the rate of 2 percent over the longer run. The Fed labeled the economic outlook as “uncertain” and said it would remain “attentive” to the risks facing consumers.
Economists anticipate a further rate cut at the Fed’s December meeting and potentially more reductions in 2025. “With additional inflation and employment data, the Fed went 25 basis points as expected. We expect the same to occur in December,” Whitney Watson of Goldman Sachs stated.
By CEO NA Editorial Staff
