US Federal Reserve Lowers Interest Rates
Jerome Powell’s Plan for Economic Stability
The US Federal Reserve has decided to lower its policy interest rate by 25 basis points, aiming to support economic stability. This decision by the Federal Open Market Committee (FOMC) reduces the federal funds rate target to a range of 4.5% to 4.75%.
Federal Reserve Chair Jerome Powell stated, “Today the FOMC decided to take another step in reducing the degree of policy restrained by lowering our policy interest rate by a quarter percentage point.” He emphasized the Fed’s commitment to sustainable economic growth and moving inflation towards a long-term goal of 2%.
Recent economic indicators show solid growth, with a steady expansion in labor market conditions. Although unemployment has risen slightly, it remains low, indicating a healthy job market. Inflation has improved but has not yet reached the Fed’s target, prompting careful adjustments in monetary policy.
The FOMC remains focused on achieving maximum employment and stable, low inflation. It acknowledged uncertainties in the economic outlook and potential risks to its goals. The Committee will closely monitor data on labor markets, inflation, and international developments, considering further rate adjustments as needed.
The Fed will continue reducing its holdings of Treasury securities, agency debt, and mortgage-backed securities to gradually unwind its balance sheet. Powell highlighted the Fed’s attentiveness to various factors, reinforcing a flexible and cautious approach to foster a resilient U.S. economy.
Doubts Revealed
US Federal Reserve -: The US Federal Reserve, often called the Fed, is like a big bank for the United States. It helps control the country’s money and keeps the economy stable.
Interest Rates -: Interest rates are like the cost of borrowing money. When the rates are low, it’s cheaper to borrow money, which can help people and businesses spend more.
Jerome Powell -: Jerome Powell is the person in charge of the US Federal Reserve. He helps make important decisions about money and the economy in the United States.
Basis Points -: Basis points are a way to talk about small changes in interest rates. One basis point is equal to 0.01%, so 25 basis points mean a change of 0.25%.
Inflation -: Inflation is when prices for things like food and clothes go up over time. The Fed tries to keep inflation at a level that is not too high or too low.
Securities -: Securities are like special pieces of paper that show you own a part of something, like a company or a loan. The Fed buys and sells these to help control the economy.
