The US Federal Reserve recently reduced its key lending rate by 25 basis points to 4.5-4.75%, following a previous cut in September. While this is seen as positive for sectors like IT and pharma, the overall market reaction has already factored in these developments
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Experts suggest that slower growth and potential tax breaks under the new Trump administration could add liquidity to the economy, but any future rate cuts will be data-dependent.
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Despite optimism about taming inflation, which remains a key goal for the Fed, there are concerns that tax breaks could fuel inflation, conflicting with the Fed’s target of 2%.
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US bond yields have been rising, signaling potential concerns about slower rate cuts or inflationary pressures.
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In summary, while Wall Street celebrated the rate cut and political changes, experts advise caution as future moves depend on economic data and policy shifts.