"Recent indicators suggest that economic activity has continued to expand at a solid pace," the Federal Reserve said in a statement.
Job creation has slowed and the unemployment rate has increased, but remains low. Inflation has moved further toward the Committee's 2 percent target, but remains somewhat elevated.
"In light of progress on inflation and balancing risks, the Committee decided to reduce the target range for the federal funds rate by 1/2 percentage point to 4-3/4 to 5 percent."
In the run-up to the Federal Reserve's two-day meeting, it was expected to announce an increase, but there was speculation whether it would opt for a more modest 0.25 or 0.5 percentage point. He chose the latter, pointing out the urgency of addressing the decline in jobs now that inflation had been brought under control.
The rate will reduce the costs of home mortgages, car loans and other credit-based businesses, and encourage businesses to expand, increase production and hire more people.
Federal Reserve Chairman Jerome Powell will provide further explanation at a press conference shortly.
The US Federal Reserve's raising interest rates is expected to encourage central banks in other economies to follow suit.
The last rate hike was in 2021, which the Federal Reserve had announced to boost economic activity following the devastating consequences of the Covid-19 pandemic.
As the US economy emerged from the Covid-19 lockdown, prices began to rise in 2021 and hit a 40-year high of 9.1 percent in June 2022, forcing the Federal Reserve to fight back by raising rates. interest rates that banks charge each other, to reduce the volume of money in circulation and force inflation back to the 2 percent target. Inflation continued to rise stubbornly as the Federal Reserve continued to raise the interest rate.
The Federal Reserve raised interest rates 11 times during 2022 and 2023, taking them from 0.08 percent in 2021 to 5.35 percent today, which is the highest in 20 years.
Job creation has slowed and the unemployment rate has increased, but remains low. Inflation has moved further toward the Committee's 2 percent target, but remains somewhat elevated.
"In light of progress on inflation and balancing risks, the Committee decided to reduce the target range for the federal funds rate by 1/2 percentage point to 4-3/4 to 5 percent."
In the run-up to the Federal Reserve's two-day meeting, it was expected to announce an increase, but there was speculation whether it would opt for a more modest 0.25 or 0.5 percentage point. He chose the latter, pointing out the urgency of addressing the decline in jobs now that inflation had been brought under control.
The rate will reduce the costs of home mortgages, car loans and other credit-based businesses, and encourage businesses to expand, increase production and hire more people.
Federal Reserve Chairman Jerome Powell will provide further explanation at a press conference shortly.
The US Federal Reserve's raising interest rates is expected to encourage central banks in other economies to follow suit.
The last rate hike was in 2021, which the Federal Reserve had announced to boost economic activity following the devastating consequences of the Covid-19 pandemic.
As the US economy emerged from the Covid-19 lockdown, prices began to rise in 2021 and hit a 40-year high of 9.1 percent in June 2022, forcing the Federal Reserve to fight back by raising rates. interest rates that banks charge each other, to reduce the volume of money in circulation and force inflation back to the 2 percent target. Inflation continued to rise stubbornly as the Federal Reserve continued to raise the interest rate.
The Federal Reserve raised interest rates 11 times during 2022 and 2023, taking them from 0.08 percent in 2021 to 5.35 percent today, which is the highest in 20 years.