- The Federal Reserve may waive dividend rates to support slowing U.S. economic growth and inflation concerns.
- Global central banks have already reduced rates while investors wait for the Federal Reserve’s move.
- Traders expect the Federal Reserve to possibly implement more wage slashes in 2024 and beyond.
The U.S. Federal Bank is ready to make its first interest fee reduction since the onset of the COVID-19 outbreak. Global economies are watching closely as investors prepare for possible effects. The Federal Reserve has been behind other central banks like those in the U.K. and the eurozone. Now, it is expected to reduce rates as economic growth slows and inflation eases. The big question is, how will this decision affect global financial policies?
Other Central Banks Act First
Central banks in different parts of the world have already started lowering interest rates. The Bank of England cut rates after inflation stayed at 2.2% in August. Mortgage holders and companies welcomed this move, but inflation risks are still a concern.
In Norway and Sweden, central banks are expected to hold their rates steady. They had already lowered them earlier this year. Switzerland’s central bank continues with its scheduled cuts, which began in March. These decisions aim to keep inflation under control while supporting economic recovery.
Fed Governor Hints at Larger Cuts
Federal Reserve Governor Christopher Waller has suggested that more rate reductions could happen if the U.S. economy worsens. Speaking in a recent interview with CNBC, he went on saying that if macroeconomic data continues to weaken, a 50-basis-point cut may be needed.
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However, if the economy shows stability, the Fed might choose a smaller quarter-point cut in November. Waller emphasized that the Fed will stay flexible and respond based on new data.
Market Uncertainty Over Fed’s Decision
Shareholders are uncertain about how far the Federal Reserve will go with cutting fees. According to the CME Group’s FedWatch tool, the chance of a larger 50-basis-point cut has gone up from below 50% to nearly 70%. Investors are watching the Fed’s September meeting closely as they expect more rate reductions for the rest of the run and into 2024.
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