In a move that sent ripples through global markets on Wednesday, the US Federal Reserve cut its benchmark interest rate by 0.25% to a new range of 3.75%–4%. This marks back-to-back reductions and the fifth cut since September 2024.
The Federal Open Market Committee (FOMC) cited moderate economic expansion, slowing job growth, and a slight uptick in unemployment. At the same time, inflation has remained elevated, keeping policymakers on edge.
With a looming government shutdown in the US entering its fourth week and key economic data delayed, fiscal headwinds are complicating the Fed’s mission. A recent analysis by ICBC International warns that longer shutdowns correlate with deeper, often permanent economic losses.
In response to rising uncertainties, the Fed also announced an end to its quantitative tightening program on December 1. Officials will meet next in December to assess new data and consider further easing.
For global investors and young professionals watching from afar, the latest rate move underscores the delicate balance between monetary policy and political gridlock. The Fed’s decision could reshape borrowing costs worldwide and influence emerging market flows.
Reference(s):
US Fed cuts rate again as government shutdown clouds outlook
cgtn.com
