The US Federal Reserve announced an interest rate cut of half a percentage point on Wednesday, the first downward adjustment in four years and a move that follows a slow but steady decline in America’s inflation rate.
The Federal Open Market Committee said the reduction was made “in light of the progress on inflation and the balance of risks”.
“Job gains have slowed, and the unemployment rate has moved up but remains low,” the Fed said in its announcement. “Inflation has made further progress toward the committee’s 2 per cent objective but remains somewhat elevated.”
Coming weeks before the November 5 presidential election, the aggressive cut of 50 basis points should lead to lower borrowing costs for consumers and businesses, reducing the threat of a so-called “hard landing” for the economy.
Higher consumer prices that have prevailed through much of US President Joe Biden’s administration have been a key point on which Republicans, including the party’s nominee, Donald Trump, have hammered Democrats.
