Lowering interest rates for the first time in a year, under the influence of President Trump's demands
The Federal Reserve of the United States has made a rate adjustment, lowering its reference mortgage rates by 25 basis points. The new range for the Fed's reference mortgage rates is now 3.75%-4%, a move aimed at making loans for mortgages, automobiles, and credit cards cheaper. The decision comes as inflation in the United States has slowed down, and the labor market has cooled, with Americans grappling with high prices and a challenging labor market. The Fed's monetary committee expressed less optimism about the growth of the U.S. economy, projecting 1.6% economic growth this year. However, the rate cut was made amidst turmoil within the Federal Open Market Committee (FOMC). Stephen Miran, a Fed governor appointed by President Trump, voted against the rate cut. Despite being a critic of President Trump, Miran was officially appointed governor of the US Federal Reserve. Interestingly, Miran sought a larger reduction in the mortgage rates, a position he reiterated at the last Fed meeting. The Fed's statement after the two-day meeting indicated an increased risk to the employment outlook. Meanwhile, President Trump is targeting the dismissal of FOMC governor Lisa Cook over a mortgage fraud accusation. The consultations for the review of the USMCA have begun in Mexico and will last for 60 days. The Fed projected two more rate cuts for the remainder of the year, a move that could stimulate growth and hiring. Lower mortgage rates could help boost consumer spending and investment, potentially leading to a stronger economy. However, the long-term implications of such a move are yet to be seen. In conclusion, the Federal Reserve's decision to lower mortgage rates reflects the current economic challenges facing the United States. While the move could help stimulate growth, it also introduces new uncertainties and potential risks. As the situation unfolds, it will be interesting to see how these changes impact the economy and consumers.
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