Fed to Cut Interest Rates for First Time Since December, Targeting 4-4.25% Range

Fed Expected to Cut Interest Rates for First Time Since December The Federal Reserve is poised to announce a 0.25 percentage point cut in its key lending rate on Wednesday, marking the first reduction since last December. The move is expected to put the target range at 4-4.25%, the lowest level since late 2022. According to market analysts, the decision reflects increased consensus among Fed officials that a stalling job market needs a boost from lower interest rates. "The data has been telling us for some time now that the economy is slowing down," said David Doyle, chief economist at Bank of America Securities. "This rate cut will help stimulate growth and keep the labor market strong." Inflation, which had surged in the post-pandemic period, has come down significantly, providing a backdrop for the Fed's decision. The inflation rate has fallen to 2.1%, below the central bank's target range of 2% annual increase. The cut is expected to have a ripple effect across the US economy, with borrowing costs decreasing and consumer spending increasing. "Lower interest rates will make it cheaper for consumers to borrow money, which should boost spending and economic growth," said Mark Zandi, chief economist at Moody's Analytics. However, not everyone is convinced that the rate cut will be enough to satisfy President Donald Trump, who has called for deeper cuts. "The president wants more, but I think the Fed is being cautious," said James Knightley, chief international economist at ING Group. The decision marks a shift in the Fed's stance on interest rates, which had been raised by 0.25 percentage points in 2022 to combat inflation. The move also reflects growing concerns about the global economy, with many countries experiencing slower growth and trade tensions escalating. In preparation for the rate cut, investors have already begun pricing in expectations of lower borrowing costs. The yield on the 10-year Treasury note has fallen to 1.75%, while stocks have rallied, with the S&P 500 index up 2% since the start of the year. The Fed's decision is expected to be announced at 2 PM ET on Wednesday, followed by a press conference from Chairman Jerome Powell. The next meeting of the Federal Open Market Committee (FOMC) is scheduled for March 19-20. Background: The US economy has been experiencing a slowdown in recent months, with GDP growth slowing to 1.9% in the fourth quarter of last year. The job market has also shown signs of weakness, with average hourly earnings growing at a slower pace than expected. Additional Perspectives: "The Fed is trying to stimulate the economy by cutting interest rates, but it's not clear if this will be enough," said Paul Ashworth, chief US economist at Capital Economics. "Lower interest rates will help consumers and businesses, but they may also lead to higher inflation in the long run," said Michael Feroli, chief US economist at JPMorgan Chase. Current Status: The Fed is expected to cut its key lending rate by 0.25 percentage points on Wednesday, marking the first reduction since last December. The decision reflects growing concerns about a stalling job market and slower economic growth. Next Developments: The next meeting of the FOMC is scheduled for March 19-20, where officials will assess the impact of the rate cut and consider further action if necessary. *Reporting by Bbc.*