US Federal Reserve Set for Potential Double Rate Cut Amid Economic Shifts

The US Federal Reserve is anticipated to cut key interest rates twice this year, in September and December, as it gradually begins easing policy. The cuts are influenced by factors such as rising unemployment rates, declining job openings, and slowing wage inflation.

The American central bank, the US Federal Reserve, is expected to cut key interest rates twice this year—once in September and again in December—according to S&P Global Market Intelligence. Ben Herzon, Senior US Economist, forecasts these reductions as part of a gradual policy easing.

The Federal Reserve's upcoming meeting on September 17-18, 2024, follows recent economic trends, including a steepened unemployment rate, declining job openings, and slowing wage inflation. These indicators suggest the Fed will lower the federal funds rate target later this month.

Separate projections from S&P Global suggest a 2.6% GDP growth for the US this year, maintaining its previous estimate, and a slight upward revision to 1.8% growth for next year. This economic outlook aligns with Federal Reserve Chair Jerome Powell's call for a reduction in interest rates to meet inflation targets, as noted at the Jackson Hole Symposium.

The US monetary policy committee raised interest rates significantly in 2022 and 2023 to combat high inflation during the COVID-19 pandemic, maintaining restrictive levels since July 2023. This strategy aims to suppress economic demand and control inflation, which had surged above the Fed's 2% goal over the past three years.

(With inputs from agencies.)