Fed Chairman Jerome Powell at a press conference on September 18 - Photo: REUTERS
According to the statement on September 18, the Fed decided to cut the overnight lending rate by 50 basis points (0.5 percentage points), keeping this index in the range of 4.75 - 5%. This easing policy will continue on schedule to bring this interest rate to the range of 3 - 3.5% by the end of 2026.
Fed Chairman JEROME POWELL
Safe landing?
This is the first interest rate cut by the US Federal Reserve (Fed) in more than four years. Since the early days of the COVID-19 pandemic (2019), the US Central Bank has raised interest rates to curb inflation, with the goal of seeking a "soft landing".
This concept is used by economists to describe lowering inflation without pushing the economy into recession. Specifically, the Fed's mission is to bring inflation down to around 2% while keeping unemployment low.
The Fed's move means the prospects for a soft landing have brightened. The decision comes as US inflation is showing positive signs, but the big problem is the worrying unemployment situation.
Indeed, Fed Chairman Jerome Powell referred to the labor market last month when he said the Fed's "mission" was to steer the U.S. economy out of an inflationary shock. "We will do everything we can to support a strong labor market as we make further progress toward price stability," he said.
Economists are divided on the Fed’s move. For some, it’s good news for President Joe Biden, who has struggled with record inflation in the United States in recent years. For others, the rate cut also shows that the US economy needs a boost after holding back for so long. Most see the US economy not heading into a recession, but there are still many challenges ahead.
Interest rates and elections
The Fed's attempt to keep interest rates high and cut them sharply now raises many questions about the impact of this decision on the 2024 US presidential election.
That’s good news for the Democratic Party of President Biden and his nominee Kamala Harris, who will take credit for keeping inflation in check. Lower interest rates, which make it less expensive to invest or spend, are also a positive signal to voters just months before the polls.
On the contrary, the US media immediately "fenced" the possibility that the Republican Party accused the Fed's decision of being politically motivated, specifically "helping" the Democratic Party right before the election.
However, US newspapers have largely argued that this was a purely economic decision, with no evidence of political involvement. The Conversation argues that in a highly diversified economy, a rate cut may make one group happy but others, such as those in the currency market, will not see it as a good thing.
Moreover, it stands to reason that both Harris and her opponent, Donald Trump, will use the move to their advantage. If Democrats are willing to take any credit for getting inflation back on track, Republicans can point to the Fed’s rate cuts as a sign of the US economy’s desperation under Biden, a consequence of the policies of the Biden-Harris administration.
CNN, meanwhile, asserted that the Fed's rate cuts have no impact on the election. Jason Furman, former chief economist under President Barack Obama (Democrat), analyzed that it would take until 2025 for these cuts to create changes in economic behavior.
"This has almost no impact on the economy before Election Day. The market is already like that and it's a long way from impacting things like unemployment, GDP or inflation," he told CNN.
In the past, Republican President George HW Bush witnessed economic growth of 5.8% in the three months immediately after the election. However, the unemployment rate increased sharply to 7.8% in June 1992. That was when the Democratic Party of Bill Clinton used the famous slogan "It's the economy, stupid" to persuade voters to "overthrow" Mr. Bush and elect Mr. Clinton.
Trump Organization seeks investment opportunities in Hung Yen
Speaking to Tuoi Tre on September 19, Mr. Nguyen Hung Nam - Vice Chairman of the People's Committee of Hung Yen province - confirmed that the Trump Organization (USA), owned by former US President Donald Trump, had come to work with the leaders of Hung Yen province and expressed his desire to cooperate and invest in this province in the fields of building hotels, golf courses and entertainment complexes.
However, everything is still at the stage of exploring investment cooperation opportunities and the Trump Organization has not proposed a specific investment amount or location in the province.
On September 16, representatives of the Trump Organization Group had a working session with the Provincial Party Secretary and Chairman of the People's Committee of Hung Yen Province at the proposal of the Hung Yen Investment and Development Group Joint Stock Company. At the meeting, Mr. Tran Quoc Van - Chairman of the People's Committee of Hung Yen Province - hoped that the Trump Organization Group would study investment plans in the province in the near future.
Speaking at the meeting, Mr. Nguyen Huu Nghia - Secretary of Hung Yen Provincial Party Committee - said that the province will create favorable conditions within the legal framework for Trump Organization to come to learn about and promote investment cooperation. The province will assign relevant departments and branches to closely coordinate with central agencies to support the group to promote investment in Hung Yen province with the highest efficiency.
Source: https://tuoitre.vn/cat-giam-lai-suat-dong-thai-gay-tranh-cai-cua-fed-20240919214256664.htm
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