Fed Cuts Rates, Signals More Easing Amid Job Market Concerns

AWANI

The Federal Reserve lowered interest rates by 0.25 percentage points to a range of 4.00%-4.25% and signaled two more cuts this year, as policymakers shift focus from inflation risks to growing concerns over weakening job growth and rising unemployment, with inflation still projected to end the year at 3% — above the Fed’s 2% target.

Transcript

00:00The Federal Reserve card interest rates by a quarter of a percentage point on Wednesday

00:05and indicated it will steadily lower borrowing costs for the rest of this year

00:09as policymakers responded to concerns about weaknesses in the job market

00:13in a move that won support from most of President Donald Trump's central bank appointees.

00:18The rate cut along with projections showing that two more quarter percentage point reductions

00:23are anticipated at the remaining two policy meetings this year

00:27indicates Fed officials have begun to downplay the risk

00:30that the administration's valuable trade policies will stop persistent inflation

00:34and are now more concerned about weakening growth and the likelihood of rising unemployment.

00:41The cut, the first move by the policy starting Federal Open Market Committee since December,

00:46lowered the policy rate to the 4.00 to 4.25% range.

00:52Inflation has eased significantly from its highs in mid-2022,

00:56but remains somewhat elevated relative to our 2% longer-run goal.

01:02Estimates based on the Consumer Price Index and other data indicate

01:06that total PCE prices rose 2.7% over the 12 months ending in August

01:11and that, excluding the volatile food and energy categories,

01:16core PCE prices rose 2.9%.

01:18These readings are higher than earlier in the year

01:22as inflation for goods has picked up.

01:25In contrast, disinflation appears to be continuing for services.

01:31Near-term measures of inflation expectations have moved up on balance

01:34over the course of this year on news about tariffs,

01:37as reflected in both market- and survey-based measures.

01:42Beyond the next year or so, however,

01:44most measures of longer-term expectations remain consistent

01:48with our 2% inflation goal.

01:50Changes to government policies continue to evolve

01:53and their effects on the economy remain uncertain.

01:57Higher tariffs have begun to push up prices in some categories of goods,

02:01but their overall effects on economic activity and inflation

02:04remain to be seen.

02:05A reasonable base case is that the effects on inflation

02:09will be relatively short-lived.

02:11New economic projections showed policymakers at the median

02:14still see inflation ending this year at 3%,

02:17well above the central bank's 2% target,

02:20a projection unchanged from the last set of forecasts in June.

02:24The projection for unemployment was also unchanged at 4.5%

02:27and the one for economic growth slightly higher at 1.6% versus 1.4%.

02:35It's like that.

02:37Wow.

02:38Good, good one.

02:49Good.

02:50Good day.

02:51Good day.

02:57Good day.

02:57Golly.

03:01Good, good and good day.

03:04Good day.

03:05Good day.

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