Interest rate cut ② Price management has achieved some results
Background of Interest Rate Cut ③ Improvement of private consumption and corporate financing
The U.S. Federal Reserve concluded its monetary policy this year by cutting its benchmark interest rate by 0.25 percentage points at a regular meeting of the Federal Open Market Committee (FOMC).
The Fed is expected to speed up its rate cut from next year, raising the possibility of a clash with the Trump administration, which prefers low-interest rates.
I'm correspondent Lee Seung-yoon from New York.
[Reporter]
The U.S. Federal Reserve cut its benchmark interest rate by 0.25 percentage point, concluding monetary policy this year, when it maintained an easing trend.
[Jerome Powell/U.S. Federal Reserve Chair: The Federal Open Market Committee (FOMC) has decided to cut policy rates by 0.25%p as an additional measure to ease policy tightening levels]
The biggest reason is the economic slowdown concerns.
As U.S. employment indicators slowed, the Fed forecast growth of 2.1% next year, lower than this year.
It is also cited as the reason behind the rate cut that price management has achieved some results.Less interest rate burdens
will improve U.S. consumer sentiment and provide conditions for companies to raise funds more aggressively.
However, the Fed has made it clear that it will significantly reduce the pace of rate cuts starting next year.
[Jerome Powell / Federal Reserve Chairman: Interest rate adjustments should be prudent. Too much rush or easing of tightening could hamper improving inflation.
As a result, it raised its base rate from 3.4% to 3.9% at the end of next year.
Another reason for the pace-setting is that next year's inflation rate is expected to be 2.5%, higher than this year's 2% management target, due to tariff bombs and illegal immigrant deportations during Trump's second term.
This is expected to raise tensions between Fed Chairman Jerome Powell and Trump, who prefers low interest rates.
John Williams, president of the New York Reserve Bank, who has a big influence at FOMC, also maintains a cautious stance that rate cuts should watch for economic indicators and policy changes, bolstering his theory of pace-setting next year's rate cuts.
I'm YTN's Lee Seungyoon from New York.
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