The Federal Reserve (FED) cut its reference interest rate in a percentage spot, and indicated that it will constantly reduce the costs of indebtedness for the rest of this year, while the authorities responded to concerns about the weakness of the labor market to a extent that obtained the support of the majority of those designated by President Donald Trump for the Central Bank.
Only the new governor Stephen Miran, who joined the Fed on Tuesday and is licensed as head of the Blanca House Economic Advisors Council, confirmed in favor of a half -point cut.
The cut of the rate, together with the projections that show that two reductions are anticipated more than a quarter percentage point in the two remaining policy meetings of this year, indicate that the FED officials have begun to reduce importance to the risk that the voluble commercial policies of the administration feed persistent inflation, and now they are more concerned with the weakening of the growth and the probability of an increase in an increase in unemployment.
The cut, the first movement of the Federal Open Market Committee since December, moves the monetary policy rate to the range of between 4% and 4.25%.
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“The Committee is attentive to the risks for both sides of its double mandate and considers that the downward risks for employment have increased,” said the Fed in its monetary policy statement.
“Employment creation has slowed down and the unemployment rate has increased slightly.”
The president of the Federal Reserve, Jerome Powell, will offer a press conference at 12:30 pm, time of central Mexico, to give more details.
Growth forecast improves in 2025
The new economic projections showed that, on average, the political leaders still foresee that inflation in the US will end this year in 3%, well above the 2% objective of the Central Bank, a projection that remains unchanged with respect to the latest Fed forecasts published in June.
The unemployment projection also remained unchanged at a rate of 4.5% and economic growth was slightly higher, when it passed 1.6% from the previous 1.4%.
Compared to the staging risks contained in the last set of projections, in which the Fed decelerated the cuts of fees to avoid inflation, the new projections show an emerging sensation among the officials that can avoid any increase in unemployment with a faster rate of rate cuts, while the inflation slowly slowly decelerates next year.
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Federal Reserve officials have gradually get used to the idea that Trump’s tariffs would only have a temporary impact on inflation, and the latest forecasts are consistent with that vision.
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The measure towards a more consistent rhythm of cuts was backed by the governor of the Federal Reserve, Christopher Waller, and the vice president of supervision, Michelle Bowman, designated by Trump who disagreed with the political decision of the end of July to keep the reference rate stable.
They look out of this last cut and seem to have planned the most drastic cuts in the projections issued after incorporating the Board of Governors on Tuesday.
In the new points diagram, a 2,875% projection by the end of 2025 stands out for being three percentage point below the next lowest. Trump has demanded drastic type cuts.
The Federal Reserve, Lisa Cook, also voted in favor of the decision, who attended the meeting despite Trump’s effort to fire her and after two courts supported her challenge of her attempted dismissal.
With Reuters information
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