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Fed Cuts Rates, But Faces Doubts: Prudence or Prolonged Pause?

  • rballestas
  • Dec 23, 2024
  • 1 min read

The Federal Reserve cut interest rates by 0.25%, placing the target range between 4.25% and 4.50%, but left open the possibility of assessing the scope and timing of future cuts, adopting a more cautious tone compared to previous statements. Fed Chairman Jerome Powell stressed the need for caution, noting that inflation is not yet at the desired level, even though the economy is in "a good position." However, some members of the Federal Open Market Committee (FOMC) expressed reservations about the decision, with one member voting against the cut and three others keeping their rate projections unchanged for 2024. Expectations now point to two cuts in 2025. In September the estimate was for four cuts, while markets adjusted their growth and inflation projections upward, driving bond yields significantly higher following the announcement.



 
 
 

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