The Federal Reserve Lowers Benchmark Interest Rate, Hints at Smaller Rate Cuts This Year
The U.S. Federal Reserve has decided to cut the benchmark interest rate again, marking the third rate cut since the beginning of 2024. The rate was reduced by 25 basis points, bringing it to 4.5%. This decision aims to address persistent inflation pressures and the risk of economic slowdown. However, with the Federal Open Market Committee (FOMC) adjusting its outlook for the future economic landscape, the market generally expects that the pace of rate cuts will slow down in 2025, with reductions likely smaller than those in 2024.In a post-meeting press conference, the Federal Reserve Chairman pointed out that despite the rate cut, inflation remains above the target of 2%, making future policy decisions more cautious. He emphasized that the Fed will adjust its policies based on upcoming economic data to achieve the dual goals of price stability and full employment. This shift in policy reflects the U.S. economy's gradual adaptation to prolonged high interest rates, but concerns remain about whether stable growth can be maintained.Investors are closely watching whether the Federal Reserve will further slow the pace of rate cuts. Despite the U.S. economy showing resilience, market expectations for future corporate and consumer spending growth are cautious. This is especially true in the stock market, where investors have started adjusting their expectations for the U.S. economy and global market stability.What impact will this rate cut have on the domestic U.S. market? Primarily, it may stimulate consumer spending and business investment. As loan costs decrease, the housing and auto loan markets will likely experience a rebound. However, balancing economic growth stimulation with avoiding further inflationary pressures will be a major challenge for the Federal Reserve moving forward.Rate Cuts Stimulate Consumer Spending and Business Investment in the U.S., Boosting the Housing and Auto Loan Markets (Photo/Source: Pixels)Overall, while the Fed has started to lower rates, this process will be gradual and will depend on the performance of the U.S. economy and future inflation trends. Investors and market participants need to closely monitor the Fed's subsequent policies to adjust investment strategies based on the evolving economic situation.Source: Comprehensive foreign media reports, Federal Open Market Committee (FOMC) meeting documents.
