USA: Fed Announces New Cut in Cost of Money

The US Federal Reserve (Fed) announced on the evening of Wednesday, December 18 (Thursday, December 19 in Europe) a quarter percentage point cut in the benchmark rate.

More specifically, the benchmark rates set by the Fed are in a “range” between 4.25% and 4.5%. This is the third consecutive decrease in the cost of money: rates were previously cut by half a point in September and then another 0.25 percent in November. The Fed, which is a kind of US central bank, also plans to make two more cuts next year, totaling half a point.

Alongside the announcement of the prime rate cut, Fed Chairman Jerome Powell (pictured) presented economic and financial projections for 2025. The inflation rate should not exceed 2.5% next year, with further fall to 2%, but not before the end of 2026. Fed analysts have finally revised upward their estimates for US GDP growth, which is “projected” at 0.1%, i.e. +2.1% from the previous estimate of 2 percent.