By Alric Lindsay
Yesterday, September 18, 2024, the Board of Governors of the United States Federal Reserve System issued a statement a 1/2 percentage point decrease in the primary credit rate was approved, effective today, September 19, 2024. Banks in the Cayman Islands are expected to follow this move.
Explaining the reasons for the decrease, the Fed said:
The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. The Committee has gained greater confidence that inflation is moving sustainably toward 2 percent, and judges that the risks to achieving its employment and inflation goals are roughly in balance.
The economic outlook is uncertain, and the Committee is attentive to the risks to both sides of its dual mandate.
The Fed added:
In light of the progress on inflation and the balance of risks, the Committee decided to lower the target range for the federal funds rate by 1/2 percentage point to 4-3/4 to 5 percent.
The Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage‑backed securities. The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective.
The Fed continued:
In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals. The Committee’s assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.
Since banks in the Cayman Islands typically change their interest rates when the Fed adjusts theirs, customers of Cayman banks can expect a lower interest rate reflected in new financing or existing variable-interest rate mortgages.
If Cayman banks do lower interest rates, it would be welcomed by members of the public who are currently struggling with high costs of living exacerbated by high interest rate payments.
