The Fed cuts rates by 50 basis points

Wed, 09/18/2024

by Ellie LeTu

Source: WSJ

• First reduction since 2020

  • Brings the federal funds rate down to 4.75% - 5.0%.

  • Just the sixth  time in the last 40 years that the Fed has switched from raising to lowering rates.

  • Joins Canada, the UK, and the EU in cutting interest rates this month.

• FED pushes labor market growth

  • A weaker labor market has prompted the Fed to make a move to support the economy. 

    • The current unemployment rate is 4.2%, up from 3.7% in January.

  • An indication that the Fed is comfortable with where it stands against inflation.

• Future plans of more cuts

  • Projections show two more quarter point cuts in this November and December.

  • The FED trying to engineer a soft landing that curbs inflation while avoiding a recession.