The US Federal Reserve is almost certain to cut interest rates for a second straight meeting on Wednesday, and could also shed light on what it will do next.  Analysts and traders expect most policymakers on the Fed’s rate-setting committee will back a quarter percentage-point cut, which would lower the bank’s benchmark lending rate to between 3.75 percent and 4.00 percent. The meeting began at 9:00 am in Washington (1300 GMT), as scheduled, the Fed said in a statement. A cut would boost a US economy still digesting the effects of President Donald Trump’s sweeping tariffs, and buy policymakers some more time as they wait for the end of the government shutdown.Republicans and Democrats remain politically gridlocked almost a month after the start of the shutdown, which has resulted in a suspension of publication of almost all official data. The Fed has a dual mandate to act independently to tackle both inflation and unemployment, which it does by either hiking, pausing, or cutting its key lending rate. Lower rates stimulate the economy and the labor market, typically feeding through into lower mortgage rates. Higher rates act to constrain activity and dampen inflation. Fed officials have in recent months flagged concerns that the labor market is cooling, causing them to shift their attention to bolstering hiring, even though inflation remains above the Fed’s target.”There’s definitely some weakening on the employment side of the mandate, and I think they’ll go ahead and take out another insurance cut against that risk,” former Cleveland Fed president Loretta Mester told AFP. “But it’s important that they not lose sight of the inflation part of the mandate,” added Mester, now an adjunct professor of finance at the University of Pennsylvania’s Wharton School of Business. “The inflation risks, I believe, remain to the upside,” she said.- December less clear-cut – Quarter-point cuts in both October and December are more-or-less baked into the financial markets, according to CME Group data, mirroring the median expectation of Fed policymakers at last month’s rate decision. But analysts widely expect Fed chair Jerome Powell to tell reporters during the bank’s post-decision press conference on Wednesday that the rate-setting Federal Open Market Committee (FOMC) is keeping an open mind about the following meeting. “I don’t think it’s a given that there will be a majority of FOMC voters that will favor easing in December,” EY chief economist Gregory Daco told AFP. Powell “has not made up his mind yet for one as to whether a December rate cut will be necessary,” added Daco, who nevertheless expects the Fed to make two quarter-point rate cuts this year. The Fed could also use Wednesday’s rate decision to announce an end date for its steps to reduce the size of its balance sheet, which ballooned in the early days of the Covid-19 pandemic. “I think they’re very cautious about stresses in the financial markets,” said Mester. “They could probably get the balance sheet down a little bit further,” she added. “But I don’t think there’s much appetite for that.” Also simmering in the background are Trump’s attempts to exert greater control over the management of the Federal Reserve, and Treasury Secretary Scott Bessent’s widely-publicized plans to find a replacement for Powell, whose term as Fed chair ends in May. But that is unlikely to feature in the actual discussions this week, with policymakers most likely remaining squarely focused on interest rate policy, according to Mester, a former voting member of the FOMC. “They’re really basing it on their best assessment… of where the economy is, where it’s likely (to) go, and how they can set monetary policy to achieve maximum employment and price stability,” she said. 

Washington has told Romania, which neighbours war-torn Ukraine, and allies it will reduce the number of US troops deployed on NATO’s eastern flank, Romania’s defence ministry said Wednesday, a move some officials downplayed while analysts warned it could embolden Russia.US President Donald Trump has repeatedly criticised NATO, and insisted that European allies boost military spending as Ukraine battles Russia’s invasion.Some 85,000 American troops are stationed in Europe, including 20,000 troops deployed to reinforce NATO’s eastern flank after Russia invaded Ukraine in 2022, according to the US Defence Department.The latest announcement came after reports this year that Washington could withdraw 10,000 troops from eastern Europe as the US focus shifts more towards the Indo-Pacific region, which the Pentagon called it’s “priority theatre”.”The resizing of US forces is a result of the new priorities of the presidential administration, announced back in February,” Romania’s defence ministry said in a statement.The decision “also took into account the fact that NATO has strengthened its presence and activity on the eastern flank,” it added.- ‘Wrong signal’ -A NATO official told AFP that the body had been informed by the Trump administration in advance, and played down its significance.”Even with this adjustment, the US force posture in Europe remains larger than it has been for many years, with many more US forces on the continent than before 2022,” the official said.Washington’s commitment to the alliance remained “clear”, the official added.But experts such as George Scutaru, co-founder of the New Strategy Center, a Romanian think tank, warned the move was the “wrong signal” to send to Russia regarding the Black Sea region. “Russia will consider that Black Sea is not so important for American interests in Europe,” he told AFP. Moscow “will be encouraged trying to put pressure more especially on Romania using drones, excursions in airspace,” he added.Scutaru said it was important for European allies to send “a signal of solidarity” and consider enhancing their “military presence to compensate,” citing France in particular, on the eve of a visit by French Defence Minister Catherine Vautrin to Romania.”1000 more, 1000 less, it does not influence a lot the military balance in the Black Sea. It’s about a political signal,” he said.Poland’s Defence Minister Wladyslaw Kosiniak-Kamysz told reporters that the country had “not received any information… about a reduction in the contingent in Poland”.Romania’s Defence Minister Ionut Mosteanu however said the US decision was not a “withdrawal”.It was the “cessation of the rotation of a brigade that had elements in several NATO countries, including Bulgaria, Romania, Slovakia and Hungary”, he told journalists. – ‘Unchanged’ capabilities -Mosteanu said that 900-1,000 US soldiers would remain in Romania.They will help “to deter any threat” and represent “a guarantee of the United States’ commitment to regional security”, he said.According to the latest government figures, about 1,700 US troops are currently deployed in Romania.Mosteanu insisted that strategic capabilities were “unchanged”. He added that a missile-defence system at the Deveselu NATO base “remains fully operational”.”The Campia Turzii air base continues to be a key point for air operations and allied cooperation, the Mihail Kogalniceanu base continues to be developed, and the American flag will remain present at all three sites,” he added.”An air-combat group will remain at the Kogzlniceanu airbase, as was the case before the outbreak of the conflict in Ukraine,” he said.The US decision will however “weaken the security” of Romania, which is a “frontline state”, Phillips O’Brien, an analyst based at Scotland’s University of St Andrews, warned.”Please wake up, Europe — the USA will not defend you against Russia,” he wrote on X.