The Third Consecutive Rate Cut Increases Inflationary Pressures and Ignites Market Expectations

This measure brings renewed focus on growing economic challenges and persistent inflationary pressures.

Content

Interest Rates
Market Reactions

Interest Rates

The U.S. Federal Reserve is expected to lower interest rates by 0.25% in its meeting today,
setting a new range between 4.25% and 4.5%. This will mark the third consecutive rate cut this year.
However, the future direction of monetary policy remains uncertain,
especially with ongoing inflationary pressures and the recent stabilization of the U.S. labor market,
which had previously added pressure on the Federal Reserve to accelerate its easing policies.

Despite inflation declining from its peak in mid-2022, it remains above the 2% target.
This situation drives the Federal Reserve to adopt a more cautious approach to future rate cuts,
with some analysts predicting a slowdown in the pace of cuts by 2025.

Additionally, potential economic policies under the newly elected President Donald Trump could impact inflation,
further complicating the Federal Reserve’s future decisions.
With inflation hovering around 2.7% and continued economic uncertainty,
debates persist over whether additional rate cuts are necessary at this time.

Market Reactions

In this context, the stock market has risen by 27% as the year-end approaches,
raising questions about a potential correction in the near future.
Investors are increasingly concerned about persistent inflation and its impact on market stability.
This concern drives them to adopt more balanced investment strategies,
including a focus on mid- and small-cap stocks,
as well as moderate allocations to gold and cryptocurrencies.

The Third Consecutive Rate Cut Increases Inflationary Pressures

The Third Consecutive Rate Cut Increases Inflationary Pressures

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