The decision by the US Federal Reserve is set to have far-reaching implications beyond America, from influencing monetary policies, financial markets to consumer mortgages and saving rates around the world.
SINGAPORE: The Federal Reserve has lowered interest rates for the first time in four years – and in a big way.in its key lending rate to between 4.75 per cent and 5 per cent. While a rate cut was largely anticipated, the size of it came as a surprise for some.
The US central bank then stood pat for more than a year, as it sought to pull inflation back down to its target of 2 per cent. Mr Kerry Craig, global market strategist at JP Morgan Asset Management, said the rate cut on Wednesday suggests a key shift in the Fed’s priorities from controlling inflation to “a jobs-first approach”“The higher unemployment rate and lower inflation forecasts are consistent with a more aggressive start to the easing cycle than we had anticipated,” a report from BMI said.
For example, the latest six-month T-bill gave a yield of 3.1 per cent, much lower than the 3.7 per cent seen at the start of this year and the 30-year peak of 4.4 per cent in December 2022. In particular, fixed-rate home loans – which have interest rates that remain unchanged throughout a lock-in period – now average around 2.6 per cent. This is down from around 3 per cent at the start of this year, according to SingCapital’s chief executive officer Alfred Chia.
“A lower interest rate environment will likely benefit Singapore’s stock market,” said Mr Koh, citing real estate investment trusts as a potential market outperformer.
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