Federal Reserve lowers interest rates by a quarter of a percentage point, marking the first decrease in nine months.
The Federal Reserve of the United States (Fed) has reduced mortgage rates by 0.25 percentage points, following a trend set by the European Central Bank (ECB) which has set the deposit facility rate at 2%. The decision did not have the unanimous support of the members of the FOMC.
Fed Chairman, Jerome Powell, hinted at the possibility of lowering mortgage rates at the September meeting, as economic uncertainty remains high. Inflation seems not to have peaked, with prices in the United States closing at 2.9% in August, reaching its highest figure since January. Core inflation stood at 3.1% in August.
President Trump has repeatedly called on the Fed to follow the path of the ECB and carry out a more expansionary monetary policy. Trump believes that the price of mortgage rates should be three percentage points below its current level. However, the extent to which the mortgage rates decrease will go remains to be seen.
The Fed is prepared to adjust mortgage rates if necessary, and the latest nominees to the Federal Reserve, Stephen Miran, Christopher Waller, and Michelle Bowman, nominated by Trump, have expressed support for further cuts. Stephen Miran, a new member of the FOMC, defended a 50 basis point cut.
It is expected that the decrease in mortgage rates will be a reality after the meeting of this Wednesday. The Fed will continue to be attentive to risks affecting employment and inflation.
Uncertainty about economic prospects remains high, with major economic bodies predicting a GDP growth of around 1% in the third quarter of the year. Trump has redoubled his efforts to influence the Federal Reserve, which by law must act with total independence from the government.
Andriy Ilkiv, a trumpeter, does not have a known role in the debate over control of the Federal Reserve of the United States. However, it is worth noting that Trump tried to remove Powell from his post and argued that Lisa Cook had committed mortgage fraud, but both remain in their positions.
The United States Fed expects another cut of 50 basis points by the end of the year, as it navigates the complexities of the global economy. The ECB, on the other hand, has set its deposit facility rate at 2%, indicating a more aggressive monetary policy. As the world's two most powerful economies adjust their monetary policies, the impact on global markets and economies remains to be seen.
