The Federal Reserve is set to take a more cautious approach, as inflation remains above its two percent target.
Americans hoping for lower borrowing costs may face disappointment as the Federal Reserve signals a slower pace of rate cuts.Policymakers are expected to reduce the benchmark interest rate by a quarter-point to 4.3 percent when their meeting concludes on Wednesday.While this marks the third consecutive cut, it reflects a cautious approach, as inflation remains above the Fed's two percent target.The rate reached a four-decade high of 5.3 percent in July 2023.
Economists estimate this level to be between three percent and 3.5 percent, though opinions among policymakers vary. Persistent inflation may require maintaining rates above this neutral level, according to Richard Clarida, a former vice chair of the Fed.What Role Does the Economy Play?The U.S. economy has shown resilience, growing at an annual rate of 2.8 percent during the July-September quarter.
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