US Federal Reserve lowers interest rates weeks before presidential election

The Federal Reserve slashed US interest rates by 50 basis points, its first cut in four years, lowering the benchmark rate to 4.75-5.00 percent. The move, double the typical 25 basis point adjustment, signals heightened concern about economic growth as inflation slows. The decision aims to safeguard the labour market amid growing uncertainties.

The US Federal Reserve cut its key lending rate by half a percentage-point Wednesday in its first reduction for more than four years, sharply lowering borrowing costs shortly before November's presidential election.

The Fed's decision will affect the rates at which commercial banks lend to consumers and businesses, bringing down the cost of borrowing on everything from mortgages to credit cards.

The move marks the beginning of the end of the Fed's high interest rate environment aimed at throttling demand, with inflation now easing towards the central bank's long-term two-percent target and the labour market continuing to cool amid a surprisingly resilient post-Covid economy.

"While this announcement is welcome news for Americans who have borne the brunt of high prices, my focus is on the work ahead to keep bringing prices down," Harris said in a statement.

"But it was a big cut," he added.

Major US stock indices finished lower following the Fed's decision.

11-to-1 in favor

(AFP)

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