Federal Reserve Cuts Rates by 50 Basis Points as Inflation Shows Signs of Easing
On September 18, 2024, the Federal Reserve announced a highlyanticipated rate cut of 50 basis points, bringing the federal funds rate to arange of 4.75% to 5%. This decision came as inflation continues to makeprogress towards the Fed’s long-term goal of 2%. While inflation remainssomewhat elevated, recent economic data indicates solid growth and a slightuptick in the unemployment rate, signaling a more balanced outlook for the U.S.economy.
Fed Chair Jerome Powell emphasized that while the rate cut aimsto bolster economic conditions, future cuts will be approached cautiously. TheFed is keen on sustaining maximum employment and ensuring inflation remainsunder control. Powell also addressed concerns about the housing market, notingthat higher mortgage rates have locked many homeowners into low-rate deals,stifling supply, but a gradual normalization of rates could unlock marketactivity.
This move comes after a long series of rate hikes aimed at taminginflation, which spiked in the wake of the COVID-19 pandemic. Investors reactedpositively, with stocks seeing moderate gains as markets digest the Fed'sfuture monetary policy
