US Fed meeting highlights- Jerome Powell’s Surprise

December is always full of surprises from the perspective of central bankers. The surprise doesn’t end, since many central bankers across the globe are calling for a cut, citing various issues in their economies. Most economies have called for a rate cut, citing a decline in inflation. And considering many of their economic fundamentals are showcasing a strong trend, the members of the central banking committee opt for the anticipated rate cuts.

US Fed meeting highlights

Decision of the US Federal Reserve

The US Fed chief, Jerome Powell, in his last meeting of the year, announced a 25-basis point cut in the Federal Reserve interest rate, which translates to a range of 3.50- 3.75%. According to the Fed Chief, the economy is doing moderately well and will continue to do so until the end of the year. In the job market, the gains made this year are slow, and the unemployment rate is creeping to high levels. Given the recent trends in trade, the domestic inflation levels are said to be at an elevated range. According to the recent data trends on inflation, the September headline inflation stood at 3%, which is higher than the target range of 2%  fixed by the US Federal Reserve.

The committee had also decided that this was the best possible decision that they could come forward with, considering the limited changes witnessed in terms of the basic economic fundamental data points. Going forward, in the months ahead, the members would likely study and make notes on the trends of the parameters to come up with significant policy changes to be announced in the new year. This could probably include the developments in the financial markets and also in the business world. Considering the dynamic nature of world trade and the dynamic nature of the US tariff policies, it is more likely that the policies going forward could incorporate the dynamic nature of the changes to their domestic economy.

The US economy did undergo a major change in terms of the policies that were being incorporated at the beginning of the year. The incorporation of tariffs threw the business houses through the roof, as it led to an increase in the cost of production. It was a painful decision taken by many business houses not to transfer the increase in costs to the final consumers. Many of the imported items did see an increase in prices, which did affect the domestic households to a great deal, as they had to shell out a lot more, affecting their household budgets. This did take a jolt to the economic fundamentals, especially the core and headline inflation. This also added pressure to the job growth and job creation numbers, as business houses did feel the pinch in terms of the rise in costs. This was more or less the scenario for many of the firms in the States. Many expansion plans did take a toll, leading to many job losses in their business operations worldwide.

One can only hope that the data goes forward till the next meeting to be held sometime in 2026, which shows some promise to bring good news to its citizens.