In terms of economy, America is the largest country in the world, whose GDP is $30.507 trillion. Meanwhile, the Federal Reserve, America’s central banking institution, has once again announced a reduction in interest rates. After this cut, the key rate has now become 3.9 percent, which was earlier 4.1 percent. This decision has come at a time when the American economy is facing a government shutdown and a decline in the rate of employment growth. However, the Fed says that this step was necessary to encourage economic growth and job creation.

Announcing the rate cut, Federal Reserve Chairman Jerome Powell said that the government shutdown has definitely affected economic activity, but this effect will not be permanent. He said that due to government work coming to a standstill, official figures of employment and inflation are not being released. Because of this, at present the Fed has to rely on economic signals from private institutions.

Decline in employment and rise in inflation became the reason for reducing rates.
The Fed had increased interest rates by 5.3 percent in the last two years to control inflation. Meanwhile, the pace of employment has slowed down, opportunities for new work are decreasing and consumer spending has decreased. The inflation rate is now at around 3 percent, which is more than the Fed’s target of 2 percent. Despite this, Powell said that now the focus will be on economic growth and increasing employment, because too tight monetary policy could have a negative impact on the market.

Impact on the American people and the world
This decision of the Federal Reserve is expected to provide relief to common American citizens. Loan installments will be cheaper, interest rates for houses and vehicles will decrease and it will be easier to take business loans. However, there will be a possibility of reduction in interest on savings accounts. This step is important at the global level also. Dollar may weaken due to low US rates and this is likely to increase investment in Asian countries including India.

Government shutdown becomes a big challenge
The federal shutdown currently going on in America is a result of the budget dispute between the government and Congress. Lakhs of government employees are without salary and the work of many departments has come to a standstill. Powell said that due to lack of government data, it has become difficult to decide the Fed’s policy. For this reason, the decision to reduce the rate in the next meeting to be held in December will depend on the circumstances.

Also read: ‘…then the name and trace of Moscow will be erased from the face of the earth’, why did the Belgian Defense Minister threaten Putin?

Donald Trump: European Central Bank (ECB) has cut interest rates for the seventh time this year on Thursday. Also, the interest rate has been indicated to reduce even more. Whereas a day before this, Jerome Powell, chairman of the US Federal Reserve indicated that he is not in a hurry to cut interest rates at the moment. He says that he will not hurry to decide on monetary policy. His focus is currently the impact of Trump’s tariff policy on the US economy.

Donald Trump raging on Pavel

Now it is obvious that Trump is unhappy with Pavel’s decision. He compared the Fed Reserve to ECB in one of his posts on Thursday and criticized Powell as “always late and wrong”. Trump says that Powell should have already reduced interest rates like the European Central Bank. Explain that the Federal Reserve has retained the policy interest rate within the radius of 4.25 percent-4.50 percent from December, while the interest rates were cut thrice from September to December 2024.

Trump put pressure on reducing interest rate

Trump argued in his post saying, “The prices of oil and grocery items (even eggs) have come down. America is getting rich through tariffs. Like ECB, interest rates should have been reduced long ago, but now it must definitely be reduced.

While Fed Reserve’s policy makers are facing many challenges these days. At an event held at the Economic Club in Chicago on Wednesday, Pavel said, “Inflation may increase due to tariffs.” In such a situation, it will be difficult for the Fed to deal with weak economic development. Earlier, Jerome Pavel had said that if inflation is not reduced then the interest rates can remain high.

Can Trump dismiss Pavel?

President Trump on Thursday attacked Federal Reserve Chairman Jerome Pavel and posted on social media, “The dismissal cannot be so soon.” In 2017, Trump appointed Jerome Powell as the chairman of the Fed. His term will end in May 2026. However, this is not the first time that Trump has threatened Powell, but earlier in 2018 he has clashed with Pavel over the interest rate policy, but did not dismiss him.

Also read:

Infosys Dividend: 17 -month -old child earned more than 10 crores from dividend, know who is concentrated Rohan idol