Published On Dec 18, 2024, 2:01 PM
The US Federal Reserve has implemented its third interest rate cut amid ongoing concerns about inflation. The current lending rate is set between 4.25% and 4.5%, which is a decrease of one percentage point since September. This decision was influenced by signs of economic stabilization and a strong job market, despite persistent inflationary pressures.
Positive
The rate cut could stimulate economic activity, especially in sectors sensitive to borrowing costs such as real estate and consumer discretionary spending. This may lead to increased consumer spending, which often drives stock prices higher.
Negative
Conversely, continued inflation concerns might make investors cautious about long-term investments in equities due to potential future rate hikes. Sectors like utilities may see a negative reaction as their high dividends look less attractive in a rising interest environment.
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