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Federal Reserve Plays Catch Up ,Jumps in With Both Feet Cutting Interest Rates 1/2 Point

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the staff of the Ridgewood blog

Ridgewood  NJ , actions speak louder then words . In a bold move to support the U.S. labor market, the Federal Reserve lowered its benchmark interest rate by half a percentage point on Wednesday. This marks the start of a significant policy shift aimed at stabilizing growth and keeping employment strong. The cut brings the federal funds rate down to a range of 4.75% to 5%, after staying at its highest level in two decades for over a year.

A Majority Signals More Cuts Ahead

Projections from the Fed’s two-day meeting suggest this might not be the last rate cut of 2024. Of the 19 officials in attendance, 10 voiced support for additional rate reductions of at least half a percentage point by the end of the year. This signals a cautious but clear intent to keep monetary policy flexible as economic uncertainties remain.

The Federal Open Market Committee (FOMC) voted 11 to 1 in favor of the rate cut, the first since 2020. This decision underscores the Fed’s efforts to balance employment growth and inflation control, especially with their target inflation rate of 2%.

Powell’s Confidence in Labor Market Strength

Fed Chair Jerome Powell expressed optimism during a press conference following the announcement, stating, “This decision reflects our growing confidence that with an appropriate recalibration of our policy stance, strength in the labor market can be maintained in a context of moderate growth and inflation moving sustainably down to 2%.”

The move is expected to provide relief to businesses and consumers alike, as lower interest rates typically ease borrowing costs, making investments and big purchases more affordable.

Stock Traders React with a “Sell the News” Mentality

While the rate cut is designed to stimulate economic activity, stock traders appeared to respond cautiously. In a classic “sell the news” reaction, many chose to sell off shares after the announcement, reflecting concerns that the rate cut may have been priced into the market ahead of time or that other economic headwinds may still challenge growth.

As the Fed continues to navigate a complex economic landscape, all eyes will be on the labor market and inflation metrics to see how these policies unfold in the months ahead.

 

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3 thoughts on “Federal Reserve Plays Catch Up ,Jumps in With Both Feet Cutting Interest Rates 1/2 Point

  1. Just in time for election season. Suspicious? Just like gasoline prices recently. Democrats once again manipulating the system for their political benefit.

    1. Anything at any cost to not allow the guy win. The sheep will again fall for these tricks.

  2. Whatever It Takes to get Kamala elected.

    If the gate’s closed, you go over the fence. If the fence is too high, we’ll pole vault in. If that doesn’t work, we’ll parachute in. But we’re going to get Kamala into the oval office, legally or otherwise.

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