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, ‘◇Proactive response to economic downturn= The decision to lower interest rates at this Federal Open Market Committee (FOMC) meeting was already a foregone conclusion, but there were divided opinions in the market on whether they would lower it by 0.25 points (baby cut) or 0.50 points (big cut). With the announcement last week of a gain of 142,000 non-agricultural jobs for August, it was suggested that there was no imminent sharp recession to be concerned about. However, opinions also surfaced that delayed or passive responses to the economic downturn, especially following the ‘Black Monday’ stock market crash on August 5th, could lead to missed opportunities.’,
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, ‘It was reported that there were divergent opinions within the Fed on the baby cut and big cut as well. However, the view that the current high-interest situation needs to be returned to normal levels promptly gained strength amid the deteriorating employment market. In fact, in the statement released by FOMC after the interest rate decision, it was analyzed that recent indicators show that the U.S. economic activity is continuing to expand at a solid pace and “The economy outlook is uncertain, and the FOMC is attentive to risks on both sides of its dual mandate for monetary policy objectives.”‘,
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, ‘◇Additional 0.50% rate cut this year= Based on the dot plot (chart showing the expected level of the benchmark interest rate) released on that day, the Fed indicated a benchmark interest rate level of 4.4% by the end of 2024. With two more FOMC meetings scheduled for November (6-7) and December (17-18), a 0.25% point additional cut is expected at each meeting within the two months. However, depending on the future economic indicators, there is speculation that there could be a 0.50% point cut.’,
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, ‘Meanwhile, the Fed forecasted a mid-range benchmark interest rate of 3.4% by the end of 2025. This was a 0.7% point decrease from the June forecast (4.1%). They also predicted 2.9% by the end of 2026, and 2.9% for 2027. In contrast, the long-term interest rate forecast from 2028 onwards was raised to 2.9%, increasing by 0.1% point from the June forecast of 2.8%. Additionally, the real Gross Domestic Product (GDP) growth rate for this year was forecasted at 2.0%, lowered by 0.1% point from the June forecast of 2.1%, while next year’s forecast remains at 2.0%.’,
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