US Federal Reserve Cuts Interest Rates Amid Mixed Economic Signals
The US Federal Reserve has announced a 0.25% cut in interest rates, bringing the target range down to 4.25% to 4.5%. This decision aligns with market expectations for continued monetary easing despite rising inflation rates, which increased to 2.7% in November from 2.6% in October. The Fed's inflation target remains at 2%, indicating a cautious approach to managing economic growth.
Labor Market Shows Signs of Recovery
In the labor market, the latest report from the US Labor Department revealed that non-farm payrolls increased by 227,000 jobs in November, following an upward revision of 36,000 jobs added in October. This growth comes after disruptions caused by Hurricanes Helen and Milton and a strike at Boeing. However, the unemployment rate saw a slight uptick to 4.2%, up from 4.1%, suggesting that while job growth is strong, the labor market is still adjusting. Average hourly earnings also rose by 0.4%, indicating a gradual increase in worker compensation.
Economic Outlook and Consumer Spending
Federal Reserve Chairman Jerome Powell expressed that the economy is performing better than previously assessed in September, which has allowed for a more cautious approach to rate cuts. Additionally, US retail sales saw a 0.7% increase in November, reaching $724.6 billion, compared to $719.7 billion in October. Despite these positive indicators, high interest rates continue to pose challenges to economic growth by dampening consumer demand.
