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Fed's Jefferson: The Fed should proceed slowly with extra rate cuts

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Fed's Jefferson: The Fed should proceed slowly with extra rate cuts

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New update 2025.11.07 21:11
Fed's Jefferson: The Fed should proceed slowly with extra rate cuts

update 2025.11.07 21:11

Fed Vice Chair Philip Jefferson said on Friday that the central bank should take its time with any further rate cuts, explaining that policy is getting closer to a neutral stance.

Key Quotes

The Fed should proceed slowly with further rate cuts as policy approaches the neutral rate.

He will decide on votes meeting by meeting and cites a potential lack of government data due to the shutdown.

Available information suggests not much about the economy has changed in recent months.

It is too soon to tell how AI will change the economy.

Interest rates FAQs

Interest rates are charged by financial institutions on loans to borrowers and are paid as interest to savers and depositors. They are influenced by base lending rates, which are set by central banks in response to changes in the economy. Central banks normally have a mandate to ensure price stability, which in most cases means targeting a core inflation rate of around 2%. If inflation falls below target the central bank may cut base lending rates, with a view to stimulating lending and boosting the economy. If inflation rises substantially above 2% it normally results in the central bank raising base lending rates in an attempt to lower inflation.

Higher interest rates generally help strengthen a country's currency as they make it a more attractive place for global investors to park their money.

Higher interest rates overall weigh on the price of Gold because they increase the opportunity cost of holding Gold instead of investing in an interest-bearing asset or placing cash in the bank. If interest rates are high that usually pushes up the price of the US Dollar (USD), and since Gold is priced in Dollars, this has the effect of lowering the price of Gold.

The Fed funds rate is the overnight rate at which US banks lend to each other. It is the oft-quoted headline rate set by the Federal Reserve at its FOMC meetings. It is set as a range, for example 4.75%-5.00%, though the upper limit (in that case 5.00%) is the quoted figure. Market expectations for future Fed funds rate are tracked by the CME FedWatch tool, which shapes how many financial markets behave in anticipation of future Federal Reserve monetary policy decisions.


Date

Created

 : 2025.11.07

Update

Last updated

 : 2025.11.07

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