New Delhi: The FOMC announcement on Wednesday could bring a major turning point for the US economy as the Federal Reserve is expected to cut interest rates for the first time since 2020. This move is significant, as it signals progress in the fight against inflation, which has burdened Americans with a high cost of living for the past two years.
However, the anticipated rate cut is happening much later than the Fed and financial experts initially thought. At the beginning of 2024, many expected the Fed to start lowering rates early in the year. Predictions from major Wall Street banks and the futures market suggested that borrowing costs would come down by spring, providing relief for both consumers and businesses dealing with rising expenses.
But as of September, no rate cuts have occurred, frustrating investors and keeping US consumers under pressure from high interest rates. That could all change with the Fed’s upcoming meeting on Wednesday.
Why The Fed Waited?
The Federal Reserve delayed cutting rates to avoid the risk of reigniting inflation. Even though inflation has come down from its peak of 9.1 per cent in 2022, the early months of 2024 were still uncertain, which led the Fed to hold off on lowering rates.
Related News |
When Is The FOMC Meeting And US Fed Rate Cut Announcement? Know Date and Time
It wasn’t until late August that Federal Reserve Chair Jerome Powell signaled the possibility of a rate cut. During his speech at the Kansas City Fed’s annual economic symposium in Jackson Hole, Wyoming, Powell indicated that inflation had eased enough for the Fed to consider reducing rates. He also pointed to the fragile state of the job market as another reason the central bank is now ready to take action.
Now, with the rate cut expected this week, both Wall Street and Main Street are watching closely. It may have a significant impact on world markets as well.
Related News |
US Fed Rate Cut: What It Means For Indian Stock Market? Here's What History Shows