The American Federal Reserve (Fed) further lowered interest rates. The institution chaired by Jerome Powell took a decision for the third consecutive meeting, leaving reference rate between 3.5% and 3.75%. This is the lowest level since 2022.
The members of the institution announced that, for the moment, There will only be a reduction in 2026.
Wednesday’s decision marks the culmination of a major shift in monetary policy. Between March 2022 and July 2023, The Fed raised interest rates from 0.25% to 5.5%. They were at this level until September 2024.
The drop was 50 basis points. A further decline followed in November of the same year and another in December.
Unchanged for the following nine months, the price of silver fell further last September. Then the central bank decided to reduce the reference rates after months of pressure from the country’s president, Donald Trump.
Since then, lowered interest rates three times. That is to say during the three meetings that took place.
With this Wednesday’s movement, the Fed consolidates the easing path started in 2024 and places the price of silver significantly below the maximums reached during the cycle of increases against inflation.
The change in central bank leadership occurred under growing political pressure from the White House.
Donald Trump, who openly criticized Jerome Powell for not cutting more quickly, has been calling for a rate cut for months and has even suggested that The current president of the central bank is expected to leave office.
At the same time, the White House suggested that The process of choosing his replacement has entered its home stretch. Trump assures that he has already made a decision and that the announcement could come before the end of the year.
The shadow of Powell’s replacement – who ends his mandate next May – transforms each meeting of the Federal Open Market Committee of the Fed (FOMC, for its acronym in English) into a dress rehearsal for the new stage with a president more aligned with the American government.
Employment and inflation
Beyond the political noise, the economic justification for the decline lies in the cooling of the labor market. The latest available data shows that employment dynamics in the United States are weakening.
In November, and according to ADP figures, The American private sector destroyed 32,000 jobs. Job losses have hit small businesses particularly hard, while wages have risen moderately.
At the same time, even if job offers are still high -7.67 million in October-, hiring remains stable and the rate of voluntary resignations has decreased. All this reflects a decline in worker confidence.
This model of few hires and few layoffs, Combined with an increase in unemployment benefits, it reinforces the idea that the labor market is no longer functioning as the robust engine it was a year or two ago.
The latest official report on the non-agricultural payrollThe month of September recorded growth of 119,000 jobs and an unemployment rate of 4.4%.
Official data for October and November, delayed by federal government shutdown –the one known as close–, will be known in the coming days and will offer a more complete vision of recent employment developments.
At the same time, the main price thermometer that the Fed monitors, The personal consumption expenditures (PCE) index shows that inflation has moderated, although it continues above the 2% target.
In September, the annual rate stood at 2.8%, both in the general PCE and in the core, which excludes food and energy.
Without unanimity
Of the 12 FOMC members eligible to vote at this meeting, nine voted in favor of a 25 basis point rate cut.
Stephen I. Mirangovernor appointed by Trump, defended a 50 basis point rate cut; while Chicago Fed President Austan D. Goolsbee and Kansas Fed President Jeffrey R. Schmidthey preferred to keep them unchanged.
A decline in 2026
As at all the last meetings of each quarter, FOMC members published their expectations for the evolution of interest rates in the short and medium term.
On this occasion, those responsible for monetary policy maintained the levels at which rates will end in 2026 and 2027.
In fact, they hope that next year the price of silver rises to 3.4%, which implies a decrease from the range between 3.5% and 3.75% in which they currently find themselves.
Likewise, they consider that the types they will settle at 3.1% in 2027 and that they will remain at this level in 2028.
More growth
FOMC members also revised their economic forecasts. On this occasion, central bankers improved their growth estimates for this and subsequent years and have reduced their inflation forecasts.
SO, The Fed expects US growth of 1.7% in 2025a tenth more than what was calculated in September.
Additionally, it projects that U.S. GDP will grow 2.3% in 2026 and 2% in 2027. The estimates are one-tenth and five-tenths higher than three months ago.
The institution provides that Prices will increase by 2.9% this year, a tenth less, and that they grow by 2.4% the following year, or two tenths less. It kept inflation growth unchanged for 2027, placing it at 2.1%.
Despite the concerns expressed by the labor market, the Fed has not changed its unemployment forecast for this or the next. Estimate that the unemployment rate will be 4.5% this year and 4.4% the next.
However, it reduced its forecast for 2027 by a tenth, to 4.2%.
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