The Federal Reserve is poised to do something Wednesday it hasn’t done in more than four years: Cut its benchmark interest rate, a step that should lead to…
Wall Street traders and some economists foresee a growing likelihood that the central bank will announce a larger-than-usual half-point cut. The release of the Fed’s rate decision will come at 2 p.m. ET.Having all but tamed inflation, the Federal Reserve is poised to do something Wednesday it hasn’t done in more than four years: Cut its benchmark interest rate, a step that should lead to lower borrowing costs for consumers and businesses just weeks before the presidential election.
However, it is not clear how quickly consumers and businesses can, or will, take advantage of lower rates. Yet after several years of strong job growth, employers have slowed hiring, and the unemployment rate has risen nearly a full percentage point from its half-century low in April 2023 to a still-low 4.2%. Once unemployment rises that much, it tends to keep climbing. But Fed officials and many economists note that the rise in unemployment largely reflects an increase in new workers seeking jobs — notably new immigrants and recent college graduates — rather than layoffs.
Some analysts have said that such a sweeping declaration suggests that Powell would favor a half-point rate cut. Other economists still think a quarter-point reduction is more likely.
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