Fed Meeting Today: 50 Basis Points Rate Cut Announced – Live Coverage with Powell

Federal Reserve Cuts Interest Rates

The Federal Reserve’s meeting today concluded with a significant interest rate cut of 50 basis points, marking the first reduction in borrowing costs after four years of increases, a move that had been highly anticipated by the markets, which remained uncertain until the final moments regarding the extent of the cut.

Powell began addressing the media in the subsequent press conference, highlighting that the U.S.
central bank initiated its rate hikes back in 2022 in response to surging inflation, primarily driven by post-pandemic supply chain disruptions and the ongoing war in Ukraine.

For the past 14 months, the Fed maintained its benchmark lending rate in the range of 5.25% to 5.50%, the highest in two decades, awaiting improvements in economic conditions.

Inflation and Economic Conditions

In today’s meeting, the Fed acknowledged that inflation rates are sustainably moving towards the 2% target, asserting that “the risks to achieving employment and inflation goals are more or less balanced.” However, they also noted that economic prospects remain uncertain.

According to the updated dot plot projections from June, the central bank anticipates a median rate of 4.4% by the end of 2024, 3.4% in 2025, and 2.9% by 2026.

Press Conference Highlights

Powell emphasized that they do not believe they are lagging behind in policy adjustments but are committed to staying ahead of economic developments.

He stated, “The U.S.
economy is in good shape, and we want to maintain that status.” Powell added that their patient approach over the past year has led to significant improvements in inflation, which is now closer to the objectives.

Future Decisions and Economic Risks

Powell pointed out that the risks tied to inflation are diminishing, while those related to the labor market appear to be increasing.
He indicated that the labor market has cooled significantly since the beginning of the year.

The decisions moving forward will not adhere to a pre-established path, reaffirming that the Fed will operate on a meeting-by-meeting basis.

Market Reactions

Following the rate cut, the dollar weakened against other currencies, with the index dropping 0.46%, marking its lowest point since July 2023.
In contrast, the euro gained 0.46%, trading at $1.1164.

The Fed’s recent indicators suggest that economic activity continues to expand at a solid pace, despite a slowdown in job growth and a slight increase in unemployment rates, which remain low.
The committee’s goal focuses on achieving maximum employment and maintaining inflation at 2% in the long run.

As the press conference progressed, it became clear that while inflation is moving closer to target, it still exceeds desired levels, ensuring the Fed remains vigilant about external developments that could impact their economic objectives.