Fed Prepares to Cut Interest Rates by 25 Basis Points

Forex - Due to inflation continuing to progress towards the 2% target, Fed officials are expected to cut interest rates by a quarter percentage point at the Federal Open Market Committee meeting on Thursday. Interest rates were reduced by 50 basis points at the FOMC meeting in September. Officials are trying to determine where rates should settle after a dramatic series of rate hikes caused by high inflation over the past three years. Loretta Mester, who retired from the Cleveland Fed presidency in June, stated, "We're entering a new phase: Policy will become less restrictive over time, because the Fed is more certain about where inflation is headed, meaning it will return to 2%." Claudia Sahm, chief economist at New Century Advisors and a former Fed economist, remarked, "There was restriction because inflation was high. Inflation is no longer high. The reason for restriction has disappeared." When the Fed concludes its two-day meeting on Thursday, the presidential race may still be unresolved, but this uncertainty will not influence the decision to further lower the benchmark interest rate. However, when a new president and Congress take office in January, especially if Donald Trump regains the White House, the Fed's future actions will become more uncertain.