US Fed cuts interest rates and other economics news to read

The United States Federal Reserve has cut interest rates by a larger-than-usual half-percentage-point. Federal Reserve Chair Jerome Powell, according to Reuters, said the move was meant to show policymakers' commitment to keeping unemployment low as inflation eases.

"We made a good strong start, and I am very pleased that we did," Powell said, having reduced the benchmark policy rate by 50 basis points to 4.75%-5.00%. He described the move as a "recalibration" to account for the sharp decline in inflation.

The reduction signals a significant change in US monetary policy. Policymakers also predicted a further 50-basis-point cut by the end of 2024, a full percentage point next year, and 50 basis points in 2026.

Meanwhile, the Bank of England has held interest rates at 5% and said it would be cautious about future cuts. The Monetary Policy Committee had voted 8-1 to keep rates on hold.

"It's vital that inflation stays low, so we need to be careful not to cut too fast or by too much," Governor Andrew Bailey said. The latest data suggests inflation is likely to rise to around 2.5% by the end of the year, up from 2.2%, according to the BoE.

The Bank of Japan has also held rates steady, although any future moves are likely to be in the other direction, having raised rates in July, according to Bloomberg. China's central bank also left its benchmark lending rates unchanged.

Norway's central bank has kept its policy interest rate unchanged at 4.5%. It said any cuts would have to wait until the first quarter of 2025.

Indonesia has cut interest rates for the first time in more than three years. In an unexpected move, its benchmark rate was reduced by 25 basis points to 6%.

Japan's export growth slowed significantly in August, with US shipments falling for the first time in three years. Machinery orders also shrank.

Australian employment jumped sharply in August, while the jobless rate held steady, suggesting the labour market remains tight.

Argentina's economy has been pushed further into recession, shrinking 1.7% in the second quarter of 2024 compared to the previous three months. The country's gross domestic product also dropped 1.7% year-on-year.

Inflation in Canada hit the central bank's target of 2% in August, triggering hopes of a 50-basis-point cut in interest rates next month.

The Philippine central bank has cut its reserve requirement ratio for large banks by 250 basis points.

Wholesale inflation in India fell to a four-month low of 1.31% in August, driven by falling costs of crude oil, steel and cement. However, food staples, like potatoes and onions, rose sharply.

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Our Sustainable Development Impact Meetings in New York next week will explore how to build a more equitable future and also see the release of our latest Chief Economists Outlook. Learn more about SDIM24 here.