The U.S. Federal Reserve announced on Thursday that it has lowered the federal fund interest rate target range by 25 basis points from 4.00% to 4.25%, in line with market expectations.

This is the first rate reduction by the Federal Reserve in 2025 and again after three rate cuts in 2024.The Fed also signaled that it would cut interest rates twice more this year.

The Federal Open Market Commission, the Federal Reserve¡¯s decision-making agency, issued a statement on the 17th that U.S. economic activity has slowed in the first half of this year. Employment growth has slowed and unemployment rate has risen slightly, but remains at its historic low. At the same time, inflation has risen and remains at a relatively high level. The Fed¡¯s monetary policy goal is to full employment and long-term inflation rate stable at 2%. The statement noted that the current economic outlook remains uncertain and the committee noted the risks faced by achieving the double goal and judged the risks of employment downturn have increased. In order to support the committee¡¯s goal and respond to the change in risk balance, the committee decided to initiate interest rates.

According to the statement, the Federal Open Market Commission voted 11 to 1, the Federal Reserve Board Chairman and Chairman of the White House Economic Advisory Committee, Stephen Milan, voted only against and called for a 50 basis point interest rate reduction.On August 7, US President Trump announced that he nominated Stephen Milan for the post of Chairman of the Federal Reserve Board, and the U.S. Senate approved Stephen Milan for the post of Chairman of the Federal Reserve Board on September 15.

In addition, the Federal Reserve released its latest economic outlook forecast on the 17th. The "dot plot" in it shows that 9 of 19 Federal Reserve officials believe that the Federal Reserve will cut interest rates twice by the end of 2025. According to US media reports, one of the officials thinks that interest rates will be cut by 1.25% this year, and this official may be Stephen Miran.

News link | The Federal Reserve's interest rate adjustment operations in recent years

For a long time, the Federal Reserve has used the hegemonic system of the US dollar to continuously harvest wealth and pass on crises all over the world through the so-called "dollar tide" formed by cutting and raising interest rates according to the needs of American interests.

In 2020, in response to the impact of the epidemic, the Federal Reserve aggressively cut interest rates. From March of that year, it continuously lowered the interest rate range to close to zero, and began to implement the so-called "uncapped" quantitative easing, which carried out an unprecedented "big release" of currency. U.S. inflation was rapidly pushed up. In June 2022, the U.S. consumer price index rose 9.1% year-over-year, and inflation hit a new high since 1980.

In response to severe inflation, the Federal Reserve raised interest rates eleven times in a row from March 2022 to July 2023, with a cumulative rate hike of 525 basis points, keeping the federal fund interest rate target range at a high level between 5.25% and 5.5% to the highest level since 2001.

In September 2024, the Federal Reserve announced a 50 basis point interest rate cut, lowering the target range of the federal funds rate to between 4.75% and 5%. This was also the first interest rate cut since March 2020. This was followed by two more rate cuts in October and December 2024.

When the U.S. cuts interest rates on a massive scale, the U.S. exports capital and robs other countries by investing in excessive dollars; when the U.S. increases interest rates, global capital continues to flow back to the U.S. so that the U.S. dollar remains strong. This poses a serious challenge to many emerging markets and developing economies, and many emerging markets and developing economies are caught up in a double situation of "more difficult to finance and more expensive debt."