THE US Federal Reserve has cut rates by 50 basis points (bps), a move aimed at boosting a cooling job market while continuing to push down on inflation.
Fed chair Jerome Powell said: “This decision reflects our growing confidence that with an appropriate recalibration of our policy stance, strength in the labour market can be maintained in a context of moderate growth and inflation moving sustainably down to 2 per cent.”
Here’s what analysts say about the rate cuts and how the move would affect economies and stock markets.
Impact on global economy and stock markets
Eastspring Investments director Sylvia Lee:
“Global growth momentum is decelerating. A weaker US labour market will likely limit wage growth over the longer-term, a key source of US consumer spending. US demand, which has been a key driver of global growth, will thus slow down further.”
“While supply-side inflation risks could arise due to geopolitical tensions, such as a deepening of the Middle East conflict, we expect inflation to trend towards the Federal Reserve’s 2 per cent target, as a weakening US labour market dampens overall demand and the US economy.”
Impact on Singapore economy and stock market
Morningstar Research senior equity analyst Michael Makdad:
“(The Monetary Authority of Singapore) is still maintaining the same upward slope of the Singapore nominal effective exchange rate (S$NEER), and the Singapore Overnight Rate Average (Sora) is around 3.45 per cent. While we could expect cuts in the Fed funds target rate to lower SGD interest rates, I think SGD rates may decline less than USD rates.”
Morningstar Research equity analyst Xavier Lee:
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“We think the rate cut will provide some near-term financing
