From CNBC: 2024-10-09 15:06:35

Federal Reserve officials chose to cut interest rates by 50 basis points in September to balance confidence on inflation and labor market concerns. Only Governor Michelle Bowman dissented, preferring a smaller reduction. Economic indicators post-meeting showed stronger labor market performance than expected, leading to expectation of less aggressive future cuts.

Post-meeting, the data revealed a stronger labor market than anticipated, with nonfarm payrolls up by 254,000 and unemployment rate at 4.1%. Chair Jerome Powell and other Fed officials support expected 50 basis points in reductions by end of 2024. The decision to cut by 50 basis points was made to recalibrate policy without signaling a less favorable economic outlook.

Although normally preferring quarter-point cuts, the Fed opted for a 50 basis point reduction, previously done only during Covid and the 2008 financial crisis. Market pricing indicates fed funds rate to end 2025 in 3.25%-3.5% range, aligning with median projection. Despite expectations, bond market yield surged about 40 basis points post-meeting.

Read more: Fed officials were divided on whether to cut rates by half a point in September, minutes show