The Federal Reserve lowered the benchmark interest rate by 0.25% (25bp) to 4.25~4.50%.
However, the US stock market saw a sharp decline, with the Dow Jones Industrial Average falling 2.58%, the S&P 500 dropping 2.95%, and the Nasdaq plummeting 3.65%.
This was attributed to cautious remarks regarding the Fed's rate cut trajectory, which suggested a reduction in interest rate cuts from four times next year to twice, and an upward revision of the projected benchmark interest rate at the end of next year from 3.5% to 3.9%.
(Federal Reserve Board Members, Dot Plot)
Although inflation has progressed towards the 2% target, it is still considered a volatile situation.
The US inflation rate for 2025 is projected to be 2.5%, with an economic growth rate of 2.1%.
Jerome Powell stated that he would consider interest rate cuts based on inflation and employment indicators, adopting a cautious stance on rate cuts.
However, the discrepancy between last September's big rate cut and his current remarks has led to criticism from some economists, who have dubbed him "the fool in the bathhouse" - a term first used by a Nobel Prize-winning American economist.
"The fool in the bathhouse" refers to someone who ruins the economy with conflicting policies of hot and cold baths.
Given the heightened political uncertainty surrounding impeachment proceedings and the prolonged slump in domestic demand, South Korea appears to still require more time to emerge from this long tunnel.
Have a pleasant day.
