The world witnessed a new step taken by the United States Federal Reserve a few days ago, consisting of a reduction in the interest rate by 0.25 percentage points. Although this reduction appears limited in scale, its potential repercussions are much broader, especially given the complexity of the current economic landscape and the interconnection of multiple influencing factors.
اضافة اعلان
Today, the global economy is facing fluctuating inflation, slowing growth, and heightened geopolitical and trade tensions. These overlapping dynamics make it difficult to precisely assess the scale of the impact, while at the same time rendering any decision by the United States Federal Reserve the focus of global attention.
At the domestic level in the United States, this decision is expected to reduce borrowing costs, thereby stimulating consumption and investment. On the other hand, inflation remains above the target levels, which restricts the Federal Reserve’s ability to continue taking similar steps in the future.
Globally, the decision exerts its influence through fluctuations in the value of the United States dollar and in the prices of basic commodities. If the dollar weakens slightly, this may ease the pressure on emerging economies burdened with debt and provide some breathing space for international trade, which has already been disrupted by the trade policies of the United States administration.
Gold, for its part, has remained at very high levels in recent months, serving as a safe haven during times of economic and political uncertainty worldwide. Oil, meanwhile, has fluctuated between expectations of stronger global demand and continuing political and economic tensions. The persistence of elevated gold prices indicates that caution still dominates the global outlook, and that financial markets view the recent interest rate cut as a calming signal than as a fundamental change.
For Jordan, the fixed exchange rate of the Jordanian dinar to the United States dollar means that the country’s monetary policy is closely aligned with decisions made by the Federal Reserve. Following the recent U.S. rate cut, the Central Bank of Jordan also reduced its interest rates. This move has the potential to stimulate lending, lower financing costs for businesses—particularly small and medium-sized enterprises—and improve access to credit. Nevertheless, the overall impact on economic growth will depend on additional factors: the extent to which banks are willing to increase lending, whether they pass on lower interest rates to borrowers, and the ability of the domestic market to attract and absorb new investments. These prospects are further complicated by regional instability, particularly the ongoing actions of the occupying power in Palestine and their broader repercussions for Jordan.
Furthermore, any decline in the prices of imported commodities such as oil and wheat could provide additional relief to Jordan, both in terms of inflation rates and through the reassessment of the value of the external public debt denominated in United States dollars.
In conclusion, the latest interest rate cut may provide a modest boost to the economies of the United States and the world, while easing some of the pressures on countries such as Jordan. Yet, it should not be considered a magical solution, but rather one tool among a network of policies and instruments that are required. For Jordan, the challenge lies in how to use this monetary space to promote inclusive and sustainable growth, rather than settling for short-term effects on loans and consumption.
