US Fed Reserve Cuts Interest Rate to 4.75 Percent as Inflation Risk Recedes

U.S. Federal Reserve reduced the benchmark interest rate to 4.75 percent Wednesday for the first time in four years after a prolonged battle to contain inflation. The Federal Open Market Committee (FOMC) cut the rate by half a percent from 5.25 percent, according to its press release.

A lower interest rate is expected to make available more funds for customers and businesses, galvanizing the economy in the presidential election year for the administration of President Joe Biden, whose deputy Vice President Kamala Harris is the Democratic nominee. Harris is taking on Republican former president Donald Trump. 

According to the committee, recent indicators suggest that economic activity has continued to expand at a solid pace. "Job gains have slowed, and the unemployment rate has moved up but remains low. Inflation has made further progress toward the Committee's 2 percent objective but remains somewhat elevated," the press release said.

"The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. The Committee has gained greater confidence that inflation is moving sustainably toward 2 percent, and judges that the risks to achieving its employment and inflation goals are roughly in balance. The economic outlook is uncertain, and the Committee is attentive to the risks to both sides of its dual mandate.