U.S. Interest Rates Drop—Is the Fed Signaling More Relief Ahead?

The Federal Reserve (Fed), the U.S. central bank, has implemented another interest rate cut following its previous reduction in September.

The Fed concluded Thursday’s two-day Federal Open Market Committee (FOMC) meeting and announced the decision to lower the benchmark interest rate by 0.25%. The new range is set at 4.50%—4.75%, down from the previous 4.75%—5.0%. This reduction follows the largest reduction in four and a half years of 0.5% from the FOMC meeting held in September. Consequently, the interest rate gap between South Korea (3.25%) and the U.S. has narrowed to 1.50%.

The Fed indicated that recent economic indicators point to a continued robust expansion of economic activity. While labor market conditions have generally eased since the start of the year, resulting in a slight increase in unemployment, the rate remains low.

“The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. The Committee judges that the risks to achieving its employment and inflation goals are roughly in balance. The economic outlook is uncertain, and the Committee is attentive to the risks to both sides of its dual mandate.”