Washington [US], September 19: The US Federal Reserve (Fed) cut interest rates for the first time in more than four years, with forecasts that it will have many impacts on the US election as well as the US and world economies .
The US Federal Reserve (Fed) on September 18 cut interest rates to 0.5%, the first cut in more than 4 years, with an expected major impact on the US presidential election on November 5.
"This decision reflects our increasing confidence that with appropriate recalibration of the stance of policy, labor market strength can be maintained amid moderate growth and sustained decline in inflation to 2 percent," Bloomberg quoted Fed Chairman Jerome Powell as saying.
Policymakers voted 11-1 to lower the central bank's interest rate to a range of 4.75% to 5%. They also proposed a further half-percentage-point cut before the end of the year and a further full percentage point by 2025.
Analysts say the rate cut could be good news for Democratic presidential candidate Vice President Kamala Harris, who is running against former President Donald Trump in the race for the White House.
"While this announcement is welcome news for Americans suffering the consequences of high prices, my focus in the coming months is on continuing to drive prices down," Harris said.
At an event in New York, Mr Trump told reporters that the central bank's decision to become independent could be a response to a "very bad" economy or a "political stunt". "It's a big cut," he added.
Policymakers said they would consider "additional adjustments" to interest rates based on "incoming data, the changing outlook, and the balance of risks." They also noted that inflation "remains elevated" and job growth has slowed.
According to Bloomberg, major US stock indexes all fell after the Fed's decision. Meanwhile, NBC reported that the market reacted positively when the Dow Jones Industrial Average (DJIA) and the S&P 500 stock index both hit record highs in the afternoon trading session on September 18.
The dollar index, which measures the greenback against a basket of currencies including the yen and euro, weakened after the Fed announcement, before rising 0.07% to 100.98.
The Fed Funds Rate sets the base interest rate that businesses in the US pay on loans, such as mortgages or other debts like outstanding credit card balances.
For many outsiders investing in the US stock market, the cut could also be good news, as lower interest rates tend to boost stock prices, according to the BBC.
Source: Thanh Nien Newspaper