U.S. Inflation Enters 2% Range, The Fed Cuts Interest Rates

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Adi Ahdiat 19/09/2024 12:06 WIB

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US inflation fell to the 2% range in August 2024. Consequently, the Fed began cutting its benchmark interest rate in September 2024.

US Annual Inflation (January 2020-August 2024)

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US Annual Inflation (January 2020-August 2024)

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According to the report from the United States Bureau of Labor Statistics, inflation in the U.S. has fallen for five consecutive months since April 2024, reaching 2.5% (year-on-year) in August 2024.

This figure represents the lowest U.S. inflation rate in the past four years, specifically since February 2021, as shown in the graph.

A week after this inflation report was released, on September 18, 2024, the U.S. central bank, or The Fed, announced a 50 basis point cut in its benchmark interest rate, bringing it down to 4.75-5%.

This is the first interest rate cut by The Fed in the past year.

"With progress on inflation and risks balanced, the Committee decided to lower the target range for the federal funds rate," said a representative of The Fed Committee in a press release on Wednesday, September 18, 2024.

They also stated that further interest rate cuts are possible to achieve the 2% inflation target.

"In considering future adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, evolving economic outlook, and risks," the Fed Committee said.

"The Committee will continue to reduce its holdings of Treasury securities and agency debt and agency mortgage-backed securities. The Committee remains highly committed to supporting maximum employment and returning inflation to its 2 percent objective," it continued.

Editor : Adi Ahdiat

"Disclosure: This is an AI-generated translation of the original article. We strive for accuracy, but please note that automated translations may contain errors or slight inconsistencies."