Photo by Jan-Rune Smenes Reite on Pexels.com
The U.S. Federal Reserve trimmed its benchmark interest rate by a quarter percentage point on Wednesday, moving it from the 4.25–4.50% range in place since December. The move, widely anticipated by markets, comes against the backdrop of political pressure from President Donald Trump to reduce borrowing costs and support the economy amid his sweeping tariffs package.
The cut follows a full percentage point reduction through 2024 and arrives as fresh data shows slowing jobs growth, with companies reining in spending to assess the long-term impact of tariffs on trade and growth. Inflation, however, remains well above the Fed’s 2% target, underscoring the bank’s delicate balancing act.
“This cut by a quarter percentage confirms a widely anticipated attempt by the central bank to walk the fine line between maintaining close to full employment and preventing inflation from rising again,” said Claudio Galimberti, Chief Economist and Global Director of Market Analysis at Rystad Energy.
The Fed also signaled at least two more cuts this year, indicating that policymakers now see the risk of higher unemployment outweighing the risk of entrenched inflation.
The decision bull-steepened Treasuries, with front-end yields falling on policy expectations while the long end stayed elevated on government deficit concerns. For energy markets, weaker short-term yields are set to pressure the dollar and boost global demand sentiment.
“For Brent in particular, today’s cut and the two expected by year-end will be a bullish factor, partly offsetting the bearish effects of OPEC+ unwinding,” Galimberti noted. He added that the cut also eases financing costs, lowering the weighted average cost of capital for large projects, though the scale of the benefit will depend on long-end yields and investor appetite for capital-intensive ventures.
Climate UX launched Green Together to help companies engage employees, strengthen ESG goals and deliver…
Alibaba Cloud’s KaryaWAN challenge aims to boost Malaysia’s AI innovation ecosystem through talent development, creativity…
Malaysia's job market faces a "talent paradox," with employers struggling to find suitable candidates despite…
Young Malaysians are embracing cold coffee culture, prompting NESCAFÉ to launch Espresso Concentrate for convenience…
The only Malaysian company within the Health Care Equipment & Supplies sector to be included,…
Regional foreign funds turned cautious despite April inflows, while higher oil prices and currency movements…
This website uses cookies.