The Federal Reserve initiated its first action of the year by reducing interest rates by 25 basis points, which was anticipated by many.

In its announcement, the Federal Open Market Committee (FOMC) noted that recent economic data indicated that economic growth in the first half of the year has been average, characterized by a slowdown in growth, a softening job market, and a slight increase in the unemployment rate. However, inflation rates have increased and are on the rise.

The weakened labour market conditions prompted the Fed to lower its key interest rate, particularly following a significant downward adjustment to the payroll report.

The Fed’s projections indicate that achieving a 2 percent inflation target over the next couple of years will be challenging, though the growth forecast has been slightly adjusted upward.

By cutting rates, the Fed is likely attempting to strike a balance between bolstering growth and employment, which may delay a reduction in inflation.

While the future direction of policy remains somewhat ambiguous due to mixed signals, there are suggestions for two additional rate cuts in 2025.

However, the US Central Bank is expected to remain vigilant regarding the labour........

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