The US Federal Reserve announced its interest rate decision in the previous Federal Open Market Committee (FOMC) meeting, leaving the benchmark interest rates unchanged at 5.25 per cent – 5.50 per cent for the eighth straight meeting, in line with Wall Street estimates.
Fed chair Jerome Powell-led rate-setting panel ended its fifth policy-setting meeting for 2024 on July 31 and unanimously voted to keep the policy rate at the 23-year high. The US central bank has maintained borrowing rates steady for 12 straight months to bring down inflation in the world’s largest economy.
Powell on Wednesday set the stage for the central bank’s first rate cut in four years, citing greater progress toward lower inflation and a cooler job market that no longer threatens to overheat the economy. Powell said if US inflation continues to fall, “a reduction in our policy rate could be on the table” when the Fed next meets in September.
Wall Street has priced in a September rate cut with experts placing bullish bets over the policy action. The Federal Reserve must go big with a supersized 50 basis point interest rate cut in September to get ahead of a looming economic storm, warns the CEO of deVere Group.
The warning from deVere Group’s Nigel Green comes as consumer prices in the US inched up modestly last month, adding fuel to the widespread expectations that the Fed will begin easing its grip on interest rates.
The latest figures from the Bureau of Labor Statistics showed a modest 0.2% rise in the consumer price index for July, including a ‘core’ measure that strips out volatile food and energy prices.
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