The United States Federal Reserve once again cut interest rates, as inflation fears continue to take a backseat to concerns about a stalling labour market.
The U.S. central bank said it was lowering the target for its key lending rate by 0.25 percentage points to a range of 3.75% to 4%.
The rate cut comes despite the U.S. federal government shutdown nearing its one-month mark, which delayed official data.
Prior to this, the Fed cut interest rates for last month for the first time since December, leading economists to expect a jump-start in further reductions; however, the lack of data leaves the future trajectory uncertain.
The Fed’s latest cut also brings the target for its key lending rate down to its lowest level in three years.
This comes after the Mortgage Bankers Association’s (MBA) reported that mortgage rates in the U.S. have fallen for a fourth consecutive week to their lowest level in 13 months after a key reading of inflation came in lower than expected.
According to the MBA Weekly Mortgage Application Survey, the most popular 30-year mortgage fell seven points to 6.30% in the week ending 24 October.
This is the lowest rate since September 2024, and with the latest drop, interest rates have fallen more than three-quarters of a percentage point since mid-January.
Alongside the mortgage rate drop, the MBA reported that mortgage loan application volume grew by 7.1% from the week prior.
“This recent decline in rates spurred the second consecutive week of increased refinance activity, driven mainly by conventional refinance applications,” MBA’s vice president and deputy chief economist, Joel Kan, said.
