Us federal reserve cut interest rate: The threat of recession in the US is continuously increasing, so the central bank US Federal Reserve has taken a big step. The Federal Reserve on Wednesday approved a cut of 25 basis points in interest rates. That is, taking loans in America will be a little cheaper than before.
The Federal Reserve has indicated that by the end of this year it can cut the interest rates twice. Actually, there are serious concerns about the labor market in America. The speed of new jobs has slowed down and there is a danger of growing unemployment. In such a situation, the government wants to promote investment and consumption by cutting interest rates.
0.25 percent reduction in interest rate
The Federal Open Market Committee (FOMC) has decided to reduce the interest rate with a majority of 11-1. The committee has reduced the benchmark overnight lending rate by 0.25 percent to 4.00–4.25 percent.
In this meeting only the new Governor Stephen Miran opposed this decision. He believed that in view of the current economic situation, interest rates should have been cut by 0.50 percent, not 0.25 percent.
What will be the effect?
EMI of debt and home loan may decrease, which will increase people’s spending ability. Foreign investors can turn to emerging markets again, which can lead to a boom in the stock market. The position of other currencies can be stronger against the dollar, and the prices of items like gold and oil will be seen fluctuations.
After the decision to cut the interest rate, mixed reactions have been found in the US market. Dow Jones Industrial Average where it rose 0.65 percent. On the other hand, S&P 500 also fell 0.2 percent and Nasdaq Composite fell down 0.4 percent.
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