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Jerome Powell, Federal Reserve Chairman Washington/Reuters Yonhap News The U.S. Federal Reserve has reduced its benchmark interest rate by 0.5 percentage points for the first time in 4.5 years. This move comes amid ongoing economic expansion and suggests the possibility of additional rate cuts later in the year. The change has narrowed the interest rate gap between the U.S. and South Korea. On September 18, 2024, the U.S. Federal Reserve (Fed) announced a 0.5 percentage point reduction in its benchmark interest rate. The rate was lowered from 5.25–5.50% to 4.75–5.00%, marking the first cut since March 2020, when the Fed began lowering rates to combat the inflation surge caused by the COVID-19 pandemic. In a statement following the Federal Open Market Committee (FOMC) meeting, Fed Chair Jerome Powell noted that recent indicators suggest continued robust economic expansion. While job growth has slowed and the unemployment rate has risen slightly, it remains at a low level. The Fed expres...

Next week, a major news event is expected to shake up the U.S. stock market Will the era of high interest rates finally come to an end?  Next week, a major news event is expected to shake up the U.S. stock market: the September U.S. Federal Open Market Committee (FOMC) meeting. The FOMC, scheduled for September 17-18 (local time), is anticipated to decide on lowering the federal funds rate. If this happens, it will mark the end of the high-interest-rate era that has persisted since 2020. Currently, the U.S. federal funds rate stands at 5.25%-5.50%, the highest level in 23 years. Caution is Still Required Market attention is focused on how much the FOMC will lower the federal funds rate in September. Typically, rates are adjusted in 0.25% increments, but there were expectations that the FOMC might implement a larger 0.50% cut. However, these expectations have recently diminished. The U.S. has been maintaining high rates to control inflation, and the latest release of the August Core...

Using English terms directly without translating them into our language can make their meanings unclear. the Reader: Does the Federal Reserve offer catering services?   Appt: Umm... yes? 🤔   the Reader: I heard they’ve started catering.   Appt: It’s not catering; it’s tapering.   the Reader: Huh?   Appt: Tapering refers to the process of reducing asset purchases… Using English terms directly without translating them into our language can make their meanings unclear. However, it’s beneficial to understand what tapering means, as it significantly impacts the global economy and financial markets. Tapering usually appears when governments decide whether to stimulate the economy or control inflation. To Understand Tapering, You Need to Understand Quantitative Easing Appt: So, in order to break up, you need to be in a relationship first, right?   the Reader: Where is this coming from?   Appt: Tapering is the process of wit...

On August 14, the U.S. Department of Labor announced that the Consumer Price Index (CPI) for July rose by 2.9% compared to the same month last year The U.S. Consumer Price Index (CPI) rose by 2.9% year-on-year in July, marking a significant drop to the 2% range for the first time in 40 months. This decline has sparked increasing expectations for a potential interest rate cut by the Federal Reserve in September. This blog post explores the recent CPI data, its implications for monetary policy, and what experts are predicting for the upcoming Federal Open Market Committee (FOMC) meeting. On August 14, the U.S. Department of Labor announced that the Consumer Price Index (CPI) for July rose by 2.9% compared to the same month last year. This increase is lower than the market forecast of 3.0% and also represents a slowdown from the 3.0% rise recorded in June. It is the first time the U.S. CPI has dipped into the 2% range since March 2021, marking a 40-month low. Excluding energy and food, th...

With the U.S. inflation rate falling below 3% for the first time in over three years, attention is now shifting towards the employment situation. A top Federal Reserve official has expressed concerns about the current high-interest rates being overly restrictive and suggested that employment may now be a more pressing issue than inflation. On August 14th, Austan Goolsbee, President of the Chicago Federal Reserve, voiced his concerns in an interview with Bloomberg. He noted that the current U.S. benchmark interest rate of 5.25% to 5.50% is highly restrictive, appropriate only in scenarios where the economy is overheating. Goolsbee refrained from commenting directly on whether the Fed would cut rates at its upcoming September meeting but did hint that the economic outlook might support rate cuts in the near future. The Fed's dual mandate of maintaining stable prices and maximizing employment is increasingly becoming a delicate balancing act. While inflation has been steadily declinin...

The US Federal Reserve has maintained the federal funds rate for the eighth consecutive time The US Federal Reserve has maintained the federal funds rate for the eighth consecutive time, signaling attention to both inflation and employment conditions. While this decision was anticipated, the inclusion of new language in the policy statement, particularly regarding rising unemployment, hints at a potential shift in monetary policy direction. This article explores the implications of the Fed's latest decision and the market's reaction. On July 31, the US Federal Reserve announced that it would keep the federal funds rate steady at 5.25% to 5.5%, marking the eighth consecutive time it has opted for no change. This decision was anticipated; however, the new language in the policy statement has drawn significant attention. The Fed's statement read, "Recent indicators suggest that economic activity continues to expand at a solid pace," and noted, "Job gains have m...