From CNBC: 2024-09-18 15:23:30

The Federal Reserve cut interest rates by half a percentage point due to softening jobs and inflation data, reducing the federal funds rate to 4.75%-5%. Further cuts are expected, reflecting a downward trend of about 2 percentage points. The decision aims to stabilize inflation without increasing unemployment significantly.

Chair Jerome Powell emphasized that the goal is to restore price stability without adversely impacting employment. The FOMC decision, approved by an 11-1 vote, was met with market volatility, with the Dow Jones Industrial Average initially rising sharply. Despite solid economic indicators, concerns over the labor market prompted the rate cut.

The Fed’s decision follows a series of emergency rate reductions during Covid, as well as cuts to combat the global financial crisis in 2008. Investors’ sentiments shifted towards a 50-basis-point cut prior to the decision, demonstrating uncertainty over the Fed’s next moves. Other central banks have adjusted interest rates in response to the economic impact of the pandemic.

Read more: Fed cuts rates by a half point at September 2024 meeting