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US Fed Cuts Interest Rates by 25 Basis Points, First Reduction Since Dec 2024
Federal Reserve: While announcing interest rates, Fed Chairman Jerome Powell stated that the employment situation in the country is worrying. New hiring has virtually stopped in recent months, and the unemployment rate has risen. Consequently, the reduction in interest rates will make home loans, car loans, and business loans cheaper.
The US central bank, the Federal Reserve, has cut interest rates by 25 basis points, or 0.25 percent, after nearly a year. The rate cut comes amid a weak job market and ongoing pressure from US President Donald Trump. This is the central bank's first rate cut since December 2024. With this reduction, interest rates have fallen to 4 percent to 4.25 percent, down from previous levels of 4.25 to 4.50 percent. The Fed has indicated that it may cut rates two more times this year.
While announcing the rate cut, Fed Chairman Jerome Powell stated that the national employment situation is concerning. Recent months have seen virtually no new hiring, and the unemployment rate has increased. Lowering interest rates aims to make home loans, car loans, and business loans cheaper, which could boost spending and investment, potentially leading to improved employment.
Despite rising inflation, recent government reports also show that hiring has slowed sharply in recent months, remaining below last year's estimates. The unemployment rate rose to 4.3 percent in August, its lowest level yet. Weekly jobless claims increased significantly last week, signaling a possible rise in layoffs.
