The United States Federal Reserve has finally announced a significant 0.5 percent cut to its interest rates, marking the start of what many analysts anticipate will be a sustained phase of monetary easing.
This more aggressive reduction in borrowing costs follows rising concerns about the state of the U.S. job market.
In its latest statement, the Federal Open Market Committee (FOMC) expressed greater confidence in inflation moving steadily towards its 2 percent target.
The committee believes that risks to meeting both inflation and employment objectives are now more balanced. However, not all officials agreed— Governor Michelle Bowman preferred a smaller 0.25 percent cut.
The Fed’s projections indicate further cuts, with another 0.5 percent reduction anticipated by the end of 2024, a full percentage point drop in 2025, and a final 0.5 percent cut in 2026
The long-term federal funds rate is expected to settle between 2.75 percent and 3.00 percent, a slight upward revision from previous expectations.
Fed Chair Jerome Powell explained, “This action underscores our increasing confidence that, with proper adjustments to our policy, the labor market can remain robust while inflation steadily declines toward our 2% target.”
This comes as Nigeria awaits an interest rate decision by the Central Bank of Nigeria Monetary Policy Committee meeting next week.
Under Olayemi Cardoso’s leadership as CBN governor, MPC has maintained monetary policy tightening measures since his appointment in September last year.
US Federal Reserve announces 0.5% interest rate cut as Nigeria awaits CBN MPC decision
