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Fed Cuts Rates, but Inflation Relief Takes Time
The Federal Reserve cuts interest rates but mortgage rates rise; Fed Chair Powell discusses inflation and economic outlook.
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United States
EconomyUs PoliticsInflationInterest RatesFederal ReserveEconomic Forecast
Federal ReserveCnn
Jerome PowellDonald Trump
- When will Americans start to feel relief from inflation?
- It will take years for Americans to feel relief from inflation, according to Fed Chair Jerome Powell. While inflation has decreased and wages have outpaced it for 17 months, it will take time for people to regain confidence and feel the positive effects.
- Why did the Federal Reserve cut interest rates this week?
- The Federal Reserve cut interest rates by a quarter of a point, the second cut since September. This provides Americans some relief from high borrowing costs, although mortgage rates have been rising despite the cut.
- Why are mortgage rates rising despite the Fed's rate cuts?
- Mortgage rates are rising despite the Fed's rate cuts because US Treasury bonds are falling, increasing yields and making US debt more attractive. This is partially due to the US economy outperforming others and anticipation of President Trump's economic policies.
- Why isn't the Federal Reserve cutting rates more aggressively?
- The Fed isn't convinced the bond market weakness is long-term and believes it may be a temporary setback due to factors beyond their control. They are monitoring financial conditions, but aren't ready to take further action yet.
- What are the Federal Reserve's economic projections for GDP growth, inflation, and unemployment?
- The Fed's projections show GDP growth slowing to 2% by year's end and remaining there for three years. Inflation is expected to rise to 2.3% by year-end, then cool to 2.1% in 2025, while unemployment is projected to rise to 4.4% by year's end and remain there in 2025.