Divided US Fed Backs Second Quarter‑Point Rate Cut!
Reported by Marian Opeyemi Fasesan | Sele Media Africa
The Federal Reserve announced its second consecutive 0.25 percentage‑point reduction in its benchmark interest rate on Wednesday, lowering the target range to 3.75 %–4 %. The move comes amid signs of labour‑market weakness and ongoing inflation concerns — but also highlights divisions within the central bank’s ranks. [1]
What We Know
- The rate cut was driven by mounting evidence that job growth is slowing and that downside risks to employment have risen. [2]
- In its statement, the Fed said future policy is “not on a preset course,” reflecting internal debate over whether more‑aggressive easing is warranted. [2]
- Some officials pushed for a larger 0.50 point cut, while others argued caution given inflation remaining well above the Fed’s 2 % target. [1]
Why It Matters
- The Fed’s decision underscores a key policy‑trade‑off: supporting employment vs. controlling inflation.
- The split in the Board suggests that markets and observers should not assume further cuts are inevitable — the path ahead remains uncertain.
- For global markets, the cut affects borrowing costs, currency valuations, and cross‑border capital flows — all of which are important for emerging economies like Nigeria.
What to Watch
- Whether the labour‑market data in coming weeks (non‑farm jobs, wage growth, unemployment) prompts further easing or a pause.
- If inflation episodes (especially energy/food) begin again, the Fed may shift back to a more hawkish stance.
- Implications for emerging markets — a weaker USD or looser US policy could ease global financing conditions.
Citations:
- Financial Times: www.ft.com/content/dd938de1-f8c3-4e5f-b58b-412ac80579fd?utm_source=chatgpt.com
- The Washington Post: www.washingtonpost.com/business/2025/10/29/fed-cuts-interest-rates-data-trump/?utm_source=chatgpt.com
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