On Wednesday, January 29, the U.S. Federal Reserve announced a pause in its cycle of interest rate cuts amid rising concerns over core inflation driven by volatile food prices. The central bank's decision reflects apprehension that certain sectors of the economy are experiencing renewed inflationary pressures.
The Fed had previously been cutting its benchmark interest rate, which it had raised to address price surges caused by the COVID-19 pandemic. The rate cuts were intended to stimulate economic activity by lowering borrowing costs for consumers and businesses.
The pause in rate reductions may pose challenges for consumers and businesses who have benefited from the lower interest rates. Higher borrowing costs could dampen consumer spending and investment, potentially slowing economic growth.
This move also sets the Federal Reserve on a potential collision course with President Donald Trump, who has been a strong proponent of lower interest rates to bolster the economy. The President has frequently criticized the Fed for not acting aggressively enough to cut rates and stimulate growth.
Reference(s):
cgtn.com
