The Federal Reserve (Fed) announced this Thursdaya drop in interest rates in the United States by a quarter of a point (0.25 points)the second consecutive decline since September, which comes two days after the US elections, which They gave victory to Republican Donald Trump.
The rate reference rate is thus located within a range of 4.5% to 4.75%, reported The US central bank issued a statement in which it provided no clues about future cuts. The announced drop is in line with what economists estimated, so there are no surprises. However, uncertainty reigns over what Fed Chairman Jerome Powell will say in a few minutes, the first after Trump’s victory.
Consistent with its usual statements, the Fed explained that to consider additional adjustments, it “will carefully evaluate upcoming economic data as well as future risks. “The Federal Open Market Committee (FOMC) strongly committed to supporting maximum employment and bring inflation back to its 2% target,” the statement said.
The American economy gives way to interest rates
Recent economic indicators, the Fed says, suggest that economic activity has continued to expand.at a steady pace“and that the risks to achieving its objectives in terms of employment and inflation are”approximately balanced.
However, “the economic outlook is uncertain and the Committee is attentive to the risks weighing on both sides of its dual mandate.” After the eleven increases made since March 2022 to control inflation, the reference rate of interest rates has been in a range of 5.25% to 5.5% since July 2023, the highest figure since January 2001. But last September, the central bank decided to start lowering interest rates, encouraged by the sustained decline in inflation in recent months. He decided to start strong and go down half a point.
According to the latest known data, dating from September, the consumer price index (CPI) stood at 2.4%. Concerning employment, another indicator that the Fed monitors closely to make its decisions, we learned last week that job creation in the United States fell in October to 12,000 net jobs, or 211,000 less than the month. precedent due to the impact of hurricanes and strikes. . The Bureau of Labor Statistics (BLS) indicated that the unemployment rate remained at 4.1%, still very low according to economists.
The risk of recession recedes
Overall, the U.S. economy remains solid, without risk of recession. Gross domestic product (GDP) increased by 0.7% in the third quarter of 2024, the same figure recorded in the second quarter.
For its part, according to the first estimated GDP figures, The annual growth rate between July and September was 2.8%, a slowdown compared to the figure recorded in the previous period, of 3%.
Before the end of the year, FOMC members plan to hold another meeting on interest rates on December 17-18.
