The Federal Reserve on Thursday lowered key interest rates by a quarter of a percentage point, its third consecutive rate cut this year that is widely anticipated by the market amid easing inflation concern. For next year, however, the outlook for additional cuts is more cautious.
The Federal Open Market Committee cut is overnight borrowing rate to a target range of 4.25 percent to 4.5 percent, its level in December 2022. The latest cut increases total reduction by a full percentage point for the Federal Funds rate.
Fed Chairman Jerome Powell said the rate reduction “was a closer call but we decided it was the right call.” Powell said inflation uncertainty next year and stronger economic growth will temper further rate cuts next year.
Powell said the higher expectation for inflation for 2025 will temper future rate cuts.
The decision of the US central bank to cut rates follows similar easing by major central banks around the world, and will likely trigger a similar monetary easing by the Bangko Sentral ng Pilipinas later Thursday.
The BSP is expected to cut benchmark rates by another 25 basis points, the third reduction this year which will take the policy rate to 5.75 percent, its lowest since February 2023.
