Fed Slashes Benchmark Interest Rate by 50 bps in First Cut Since 2020
On Wednesday, September 18, the U.S. Federal Reserve lowered its benchmark interest rate for the first time since March 2020.
The Sept. 18, 2024 rate cut amounted to 50 basis points, a notably bigger adjustment than many analysts anticipated. According to the Federal Open Market Committee (FOMC) press release, the central bank remains focused on reaching its 2% inflation target. “In light of the progress on inflation and the balance of risks, the committee decided to lower the target range for the federal funds rate by ½ percentage point to 4-¾ to 5%,” the FOMC said. “We concluded that this was the right thing for the economy and the people we serve,” the Federal Reserve chair, Jerome Powell, said, referring to the central bank’s decision to cut interest rates by half a percentage point.
Market analysts were eager to hear from Fed Chair Jerome Powell, who addressed the business media and shed light on the potential direction for the upcoming November 2024 FOMC meeting. Before this rate cut, during the Biden-Harris administration, inflation in the U.S. hit a staggering 9.1%, the highest level since 1981. Concurrently, the Fed’s federal funds rate, which stood at 5.25-5.50%, was at a 23-year high. This latest 50 bps cut could signal the beginning of a prolonged easing cycle.
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