The US central bank decided to cut its interest rate

The decision of the Open Market Committee, which decides on monetary policy, was unanimous.

of the United States As expected, the central bank decided on Thursday to cut its key interest rate by 0.25 percentage points. The Open Market Committee, which decides on monetary policy, justifies its decision with the slowdown of inflation.

“Inflation has progressed towards the committee’s two percent target, but is still at a somewhat rapid level,” the statement says.

According to the committee, the outlook for the economy is uncertain, and it announces that it is paying attention to the risks of inflation and employment.

The committee’s unanimous decision means that the key interest rate range will be reduced to 4.50–4.75 percent. The central bank started interest rate cuts in September, when it resorted to a larger than usual rate cut of 0.50 percentage points.

The decision did not cause very big changes in the securities market.

“The central bank does not change its monetary policy based on what Donald Trump has promised to make but wait for concrete decisions. If nothing miraculous happens in the near future, I believe the central bank will cut the key interest rate by 0.25 percentage points again in December,” says the chief analyst of the financial company Nordea Jan von Gerich.

Consumer prices increase in price, i.e. inflation slowed down in September to 2.4 percent. According to the central bank’s price stability objective, inflation should average two percent over a long period of time.

From the Governor of the Central Bank From Jerome Powell was asked at the press conference about the economic policy of Trump, who was voted as the next president.

“The outcome of the election will have no impact on our monetary policy,” CEO Powell said. He also emphasized that monetary policy decisions are made based on the available facts about the economy.

Trump has promised to lighten taxation and impose import duties on foreign products, which are very likely to accelerate inflation. Keeping it in check is, on the other hand, a key task of the central bank.

“There is a lot of uncertainty in the economy because of Trump. However, economic growth has so far been faster than expected, the labor market is strong and inflation is still over two percent. We estimate that the central bank will lower the key interest rate by 0.25 percentage points in December,” says the market economist of financial group OP Jari Hännikäinen.

With an interest rate cut is in any case of considerable economic importance, as the United States is the world’s largest national economy. Easing monetary policy is apt to increase household consumption and business investment.

The interest rate cut is transmitted to the economy in stages and typically reaches its full effect within a good year.

By Editor