As expected, the Federal Reserve announced the first interest rate cut of the year, while also signaling that two more rate cuts will happen before the end of the year.
The quarter-point cut was also the first rate cut under President Trump, who has criticized Fed Chair Jerome Powell for months, for not cutting rates and politicizing the decisions.
"Trump looks at it, and he thinks that people are locked in, that the growth is being stalled because there isn't enough cash circulating because interest rates are too high" said Richard Stern, director of economic and budget policy at the Heritage Foundation, "Powell's looked at the data and scene more frankly what I have scene, which is that the risk is that we would get inflation."
The vote was 11 to 1, and now puts the overnight funds rate in a range between 4%-4.25%.
"It's exactly what the market had come to expect, but it does show you that there's a lot of this internal conversation about where to go, and what to do" Stern told KTRH.
Newly installed Governor Stephen Miran was the only one who voted against the quarter-point move, instead calling for a half-point cut. Stocks have risen on the news.
In a statement, The Fed said that “job gains have slowed” and added that inflation “has moved up and remains somewhat elevated.”
“Uncertainty about the economic outlook remains elevated” the Fed statement said. “The Committee is attentive to the risks to both sides of its dual mandate and judges that downside risks to employment have risen.”
Photo: AFP