A new cut in interest rates
The Federal Reserve announced last night in Washington a further cut in interest rates, bringing them to a range between 4.25% and 4.5%. This represents the third consecutive intervention by the American central bank, which has adopted a moderately expansive monetary policy. The FOMC, the committee that deals with financial decisions, announced that the reduction of a quarter of a percentage point closes a year in which rates were lowered by an entire percentage point, starting with a large cut of 0.5%
in September.
Market reactions and future expectations
Despite the Fed’s intent to stimulate the economy, Wall Street’s reaction was negative. The S&P 500 Index registered a 3% decline, highlighting investor concerns about the future direction of monetary policy. Washington bankers have announced that in 2025 there will be only two additional rate cuts, compared to the four previously expected. This revision of expectations is influenced by the anticipation of higher inflation in the United States compared to previous months
.
Global impact and economic prospects
The interest rate news didn’t have a positive impact on Asian markets either. In Tokyo, the Nikkei index closed the session down 0.8%. Concerns about inflation and global economic growth continue to weigh on investor decisions. The Fed, while trying to stimulate the economy, faces significant challenges, including market instability and rising inflation expectations. Analysts are wondering how these decisions will affect the U.S. and global economy in
the coming months.