John Jefferson
Watch as Joe Biden delivered remarks at the Economic Club of Washington in DC on Thursday, 19 September, after the Federal Reserve broke a four-year run and cut its benchmark interest rate by half a percentage point to 4.75-5.0 percent.
The move signals that the US central bank believes it is winning the war on inflation and will now focus on preventing the job market from weakening.
One immediate effect should be lower borrowing costs for both consumers and businesses in the run-up to November’s presidential election.
In a preview of the president’s speech, chief of staff Jeff Zients said: “This is not meant to be a declaration of victory. It’s meant to be a declaration of progress — significant progress. The president believes it’s important to mark this moment for the country by laying out how far we’ve come, while also outlining the work we still have to do.”
In an official statement, the Fed’s Federal Open Market Committee said: “The Committee seeks to achieve maximum employment and inflation at the rate of two percent over the longer run. The Committee has gained greater confidence that inflation is moving sustainably toward two percent, and 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.”
The Fed’s benchmark policy rate has been held in the current 5.25-5.5 per cent range for 14 months. That is longer than three of the last six Fed “hold” periods, in which interest rates were kept steady, but shorter than what preceded the 2007-2009 financial crisis.
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