On December 18, after a two-day meeting, policymakers of the US Federal Reserve (Fed) voted to cut interest rates by 0.25 percentage points, bringing interest rates down to the range of 4.25 - 4.50%.
US Federal Reserve Chairman Jerome Powell speaks at a press conference on December 18 in Washington - Photo: REUTERS
This is the Fed's third consecutive rate cut since September. Fed policymakers now predict they will make just two more 0.25 percentage point rate cuts by the end of 2025.
This means the amount of policy easing next year will be 0.5 percentage point less than the forecast by Fed officials last September.
In an economic forecast update released after the meeting, the Fed slightly raised its forecast for US economic growth in 2025 to 2.1% and the unemployment rate to around 4.3%.
The average inflation forecast by the end of 2025 was raised to 2.5%, from 2.1% given in September.
In addition, the Fed is expected to conduct only two interest rate cuts next year, bringing the benchmark interest rate to the range of 3.75 - 4.0% by the end of 2025.
Despite signs of cooling inflation, Fed Chairman Jerome Powell said the Fed is starting to consider the potential economic impacts of President-elect Donald Trump's policies, including tariff hikes, tax cuts and tighter immigration policies.
Mr. Powell’s comments sent financial markets reeling. Stocks fell sharply, bond yields rose, and investor expectations for further rate cuts next year fell sharply.
At the close of trading on December 18, the Dow Jones Industrial Average recorded its biggest one-day decline in more than four months, losing 1,123.03 points (2.6%) to 42,326.87 points. The index also fell for the 10th consecutive session, marking its longest losing streak since October 1974.
The S&P 500 fell 178.45 points, or nearly 3 percent, to close at 5,872.16. The Nasdaq Composite also fell 716.37 points, or nearly 3.6 percent, to 19,392.69. This was the index's biggest one-day drop since June 24.
Meanwhile, world gold prices fell 1% to their lowest level in nearly two weeks in the trading session on December 18.
At the COMEX exchange in the US, spot gold prices fell 0.9% to $2,622.71/ounce. Meanwhile, US gold futures prices also fell 0.3%, closing at $2,653.30/ounce.
The incoming Trump administration is expected to struggle to deliver on campaign promises such as lowering prices, as the Fed's tight monetary policy keeps consumer lending rates, especially home loans, high.
Mr. Powell even admitted that the decision to cut interest rates this time was a "close call" and not as certain as the market expected. This decision also faced opposition from Cleveland Fed President, Ms. Beth Hammack, who wanted to keep interest rates unchanged.
Source: https://tuoitre.vn/fed-giam-lai-suat-lan-3-lien-tiep-gia-vang-va-chung-khoan-lao-doc-20241219084504301.htm
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