Fed cuts key interest rate by 0.5% and teaches the ECB a lesson

Article by Dr. Christian Jasperneite

The US Federal Reserve has lowered key interest rates by 50 basis points. This puts the target corridor for the Fed Fund Rate at 4.75%-5.0%. What was unusual about this decision was that it was not taken unanimously. Michelle Bowman, who has been a member of the Fed since 2018, was only in favor of a key interest rate cut of 25 basis points. In some ways, this is an astonishing development, as interest rate decisions have been made unanimously at the Fed for almost 20 years.

How should the decision be interpreted? We get to the bottom of this question in the latest issue of “Economic Situation and Strategy”.