For the first time since Trump came to power, interest rates are being cut, but not as much as the president had wanted.
The case is being updated
The US Federal Reserve cuts interest rates by a quarter of a percentage point, in line with market expectations. This brings the interest rate to a range of 4.00–4.25 percentage points.
The dollar weakens to its weakest level of the year immediately after the announcement, and now costs 9.74 kroner, around 7 øre less than earlier in the evening.
President Donald Trump and some speculators, however, had hoped for a larger rate cut. The only person who voted for a double cut was Stephen Miran, who joined the rate committee on Tuesday after being nominated by Trump.
There has been no shortage of drama surrounding the Fed since Donald Trump returned to the White House at the start of the year. The president has nicknamed the central bank chief"Too late Powell" and called him "stupid." However, interest rates in the US have not been cut since December 2024.
A weak labor market and inflation that appears to be under control make it easier to defend interest rate cuts now.
Waiting for two more cuts
Chief economist Marius Gonsholt Hov at Handelsbanken says that the quarter-percentage point cut was as expected.
– A very low probability of double cuts was priced in. So we can cancel that out, he says.
Hov is also not surprised that Miran voted for double cuts.
– It's because his boss's name is Trump, he says.
Going forward, the Fed is now signaling two more cuts totaling 0.50 percentage points, also in line with expectations.
– The Fed has meetings in October and December, so basically that's the median expectation now, says Hov.
Like Norway, the US Federal Reserve has a target for interest rate setting of keeping inflation around two percent over time. In addition, unemployment must be taken into account.
