Mumbai, 19 Dec (Commoditiescontrol):The US Federal Reserve reduced its benchmark interest rate by 25 basis points on Wednesday, the third cut this year, while signaling a slower pace of rate reductions in 2025 amid persistent inflationary pressures.
In its latest projections, the Fed anticipates only two rate cuts of 25 basis points each in 2025, a sharp downgrade from its September forecast of four reductions. This suggests that borrowing costs for mortgages, auto loans, and credit cards are unlikely to ease significantly next year.
Fed officials noted they are nearing the "neutral" rate—a level that neither stimulates nor constrains economic activity. With the latest move, the benchmark rate now stands at 4.3%, following a 50-basis-point cut in September and a 25-basis-point reduction in November.
The Fed’s cautious outlook has strengthened the dollar index, reflecting expectations of tighter monetary conditions compared to prior forecasts. A stronger dollar typically weighs on commodity prices, as it makes dollar-denominated goods like crude oil and metals more expensive for buyers using other currencies. This could exert downward pressure on global commodity prices, potentially slowing demand in key import-dependent regions.
(By Commoditiescontrol Bureau; +91-9820130172)
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