US Federal Reserve slashes interest rates by 0.5% as Nigeria awaits return of foreign investors 

This more aggressive reduction in borrowing costs follows rising concerns about the state of the U.S. job market.

In its latest statement, the Federal Open Market Committee (FOMC) expressed greater confidence in inflation moving steadily towards its 2% target.

The committee believes that risks to meeting both inflation and employment objectives are now more balanced. However, not all officials were in agreement—Governor Michelle Bowman preferred a smaller 0.25% cut.

The Fed’s projections indicate further cuts, with another 0.5% reduction anticipated by the end of 2024, a full percentage point drop in 2025, and a final 0.5% cut in 2026.

The long-term federal funds rate is expected to settle between 2.75% and 3.00%, a slight upward revision from previous expectations.

Fed Chair Jerome Powell explained, “This action underscores our increasing confidence that, with proper adjustments to our policy, the labour market can remain robust while inflation steadily declines toward our 2% target.” 

The U.S. Federal Reserve’s rate cut is likely to influence the upcoming decision of Nigeria’s Monetary Policy Committee (MPC), which meets next week to discuss potential rate adjustments.

Additionally, lower global interest rates can stimulate both private and public sector spending, potentially driving up global economic activity.

As foreign goods become more affordable, Nigerian businesses might face increased pressure from imports, impacting their profitability and market share.

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