Fed cuts rates by 0.5% to kickstart easing cycle
The article discusses the Federal Reserve's decision to cut interest rates by 0.5%, marking the start of a new easing cycle, and the subsequent market reactions.
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The 🇺🇸Federal Reserve made a significant policy shift on Wednesday, cutting its benchmark interest rate by half a percentage point. This marks the beginning of a new easing cycle, the first since the pandemic's onset. With this decision, the federal funds rate now sits between 4.75% and 5%, a notable change after more than a year of holding rates at their highest levels since 2001.
In a rare move, Michelle Bowman, a member of the 🏦Federal Open Market Committee, opted for a more cautious quarter-point cut, becoming the first Fed governor since 2005 to dissent from a rate decision.
The substantial half-point reduction indicates the Fed's proactive stance to counter any potential weakening in the US economy and labor market. Not since the early days of the COVID-19 😷pandemic in 2020 has the central bank implemented a rate cut of this magnitude.
"The US economy is in a good place, and our decision today is designed to keep it there," said Fed Chair Jay Powell. He emphasized that this policy adjustment aims to sustain the economy's momentum, bolster the labor market, and make further progress toward inflation targets as the Fed moves towards a more neutral stance.
Market reaction:
S&P 500 ($SPXUSD) 📉 | Closed near flat at 5,634 after hitting a record high earlier, as previously projected in our article. |
| Dow Jones ($DJIUSD) 📉 | Slightly dipped by 0.04% to 41,606. |
Nasdaq ($NDXUSD)📈 | Gained 0.2%, finishing at 17,628. |
Gold ($XAUUSD) 📈 | Surged closer to its all-time peak, with $2,600 in sight. |
$EURUSD 💹 | Jumped above 1.1150, reacting positively to the rate cut. |
Stay tuned to 🔵 nomo for the latest market moves and updates on key releases to keep up with how the markets respond.
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