The U.S. Federal Reserve announced a 0.5 percentage point cut in interest rates on Wednesday, the first downward adjustment in four years and a move that follows a slow but steady decline in U.S. inflation. be.
The Federal Open Market Committee said the aggressive cuts were made “taking into account the evolution of inflation and the balance of risks.”
“Job growth has slowed and the unemployment rate has risen but remains low,” the Fed said in its announcement. “Inflation has made further progress towards the Committee’s 2% target, but remains at a moderately high level.”
The committee expects the unemployment rate to reach 4.4% by the end of the year, up from the current 4.2%, a range that Federal Reserve Director Jerome Powell called “very healthy.”
“Last year we were used to seeing numbers in the middle of the third, even below the middle of the third,” he said. “But if you look back over the last few years…the unemployment rate is very healthy. And anything in the low $4 is a very good labor market.”
“The number of vacancies per unemployed person is still back to very strong levels,” Powell added. “It’s not as high as it used to be. The number, as measured, reached two vacancies for every unemployed person. It’s now below about one, but it’s still a very good number.”
