Name: U.S. Federal Reserve expected to cut interest rates
Uploaded: 2025-10-29T08:10:23.900Z
Duration: 2 min 9 s
Description: The U.S. Central Bank, the Federal Reserve, is meeting this week to discuss the economy and whether to cut interest rates. The Fed dropped the rate by a quarter of a percent last month, but President Trump wants deeper and quicker cuts to stimulate the economy.

The U.S. Central Bank, the Federal Reserve, is meeting this week to discuss the economy and whether to cut interest rates. The Fed dropped the rate by a quarter of a percent last month, but President Trump wants deeper and quicker cuts to stimulate the economy.

Washington

Businesses such as Jeff Harner's new distillery in Maryland are closely monitoring the Federal Reserve's upcoming interest rate decision, as changes could directly affect their loan expenses and ability to invest or hire staff. The Federal Reserve, which meets several times a year to set interest rates, recently made its first cut of the year by a quarter of a percent, impacting both borrowers and savers.

While lower interest rates can stimulate economic activity by reducing borrowing costs, there are concerns that significant cuts could lead to short-term boosts in demand followed by rising inflation. The Federal Reserve, led by Jerome Powell, has maintained that its decisions are guided by economic data rather than political pressure, acknowledging the broad impact its policies have on individuals and businesses worldwide.

U.S. Federal Reserve expected to cut interest rates

Jeff Harner's new distillery in Tacoma Park, Maryland should be open early next year. The building work takes time and money. That's why he'll watch the Federal Reserve's interest rate decision very closely. Some of the loans that we have for this expansion project are a floating rate loan. And so as that rate comes down, it's tied to a Treasury bill. As that comes down, our expenses go down. Money saved can be ploughed back into the business. Could that mean the difference between this surviving and thriving or not? And it could mean the difference between me being able to hire additional staff, me being able to make more investments in our business over the long term, absolutely. When the Federal Reserve makes its decisions here at its headquarters in Washington, its impacts are felt across the country. It wants to steer the economy, so it creates jobs and keeps prices low. One of the biggest tools it's got to do that is interest rates. The U.S. Federal Reserve meets several times a year to discuss and set interest rates. In September, they cut the rate by one quarter of one percent, the first cut this year. Every interest rate decision impacts people's pockets differently. A high interest rate means you can earn more money on your savings, but it means credit card debt costs more. It costs more to get a home loan or a car loan. And that tends to have a knock-on effect of less house building and less consumer spending. Donald Trump has made clear he wants big cuts now. But that idea carries a huge threat. If you were to suddenly reduce the interest rate from about four percent where it is in America down to one percent or two percent where the president wants, that would have a massive boost in aggregate demand. But only for a very short-lived period of time you'll see inflation kind of skyrocket as a result of that. This isn't a theoretical exercise. It's been tried in multiple countries in the past and present, and it always goes the same way. Managing interest rates is a tricky balancing act. Jerome Powell's Fed has resisted political pressure, saying he goes where the data takes him. Knowing whatever decision he makes makes a big difference to tens of millions of people around the world, from consumers to big companies and small companies getting off the ground. But he could still anger a president. Alan Fisher, Al Jazeera, Washington.

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