Nov. 6 (UPI) — Prognosticators anticipate the Federal Reserve on Thursday will announce a second rate cut after lowering the federal lending rate by 0.5% in September.
The expected rate cut would be half that amount at 0.25%, which would lower the Federal Reserve’s lending rate to between 4.5% and 4.75%.
The current lending rate is between 4.75% and 5%, while inflation in October was 2.1%.
The Federal Reserve has a 2% goal for inflation to lower the federal lending rate to banks without causing inflation to rise.
The Federal Reserve initially raised the lending rate to counteract inflation that reached a 40-year high during the pandemic, which raised the cost of living.
The central bank raised its lending rate to between 5.25% and 5.5% in 2022 and 2023 as inflationary rates rose rapidly and caused significant price increases at grocery stores and elsewhere.
Raising the lending rate reduces demand for loans and slows spending, which is why the Federal Reserve raises the rate when inflation rises beyond tolerable levels.
With inflation apparently under control and very close to the targeted 2% inflation rate, the Federal Reserve is expected to continue lowering the lending rate several more times during 2025.
Lowering the lending rate helps spur job growth by freeing up more money to stimulate the national economy.
Federal Reserve Chairman Jerome Powell will announce the Federal Reserve committee’s decision on the current rate at 2:30 p.m. EST Thursday.
Powell’s announcement will be aired on cable news channels and available for streaming online on C-SPAN.
Leave a Comment