RIYADH: The US Federal Reserve cut interest rates by half a percentage point to a range of 4.75–5 percent, capping nearly two years of rate hikes. But what does this mean for the startup and venture capital ecosystem?
The relationship between the US Federal Reserve and the worldwide startup ecosystem is rather convoluted. Washington’s interest rate decisions have a big impact on the cost and availability of financing, which are important considerations for venture capital firms and entrepreneurs. Bahoshy stated in an interview with Arab News that the anticipated trend rather than the actual cut might be more important.
“You need to understand why the Fed has made this decision in order to answer what effect the cut will have on venture capital investment,” Bahoshy stated. The ultimate goal is to reduce or stabilise inflation while maintaining moderate to low unemployment in the United States, according to Jerome Powell, the chair of the US Federal Reserve,” he continued.
Lowering interest rates can encourage people’s spending and disposable income because the indicators point to a healthy economy and a desire to avoid a recession or other setback in the US economy, the analyst noted.
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