US Fed Cuts Interest Rate By 50 Basis Points, First Reduction Since 2020

US Fed Rate Cut:  The U.S. Federal Reserve reduced its benchmark interest rate by 50 basis points, its first decrease since 2020, as the central bank began unwinding restrictive policies intended to combat inflation. The Federal Reserve’s benchmark policy rate has been in the 5.25%-5.50% range for 14 months, with the U.S. Federal Funds rate now in the 4.75-5 per cent range with the rate reduction.

The Federal Open Market Committee, the U.S. rate-setting body, completed its two-day meeting on Wednesday. Following the FOMC meeting, U.S. Fed Chairman Jerome Powell stated that the U.S. economy as a whole is strong and the labour market has cooled while inflation has considerably decreased.

U.S. equity markets welcomed the 50 basis point reduction and remarks from U.S. Fed Chairman Jerome Powell. U.S. stock markets rebounded with equity indices the Dow 30 and Nasdaq trading up 250 points or 0.60 per cent and 190 points or 1.08 per cent, respectively. The dollar index, on the other hand, fell 0.54 per cent to 100.3460.

Also Read: Adani Group Share Price: Adani Enterprises, NDTV, Adani Wilmar, ACC, Adani Green Energy close In Red; Adani Ports Settles High

The rate was raised in 2021

The last rate increase was in 2021, which the Fed announced to stimulate economic activity after the crippling aftermath of the Covid-19 pandemic hit a 40-year high of 9.1 per cent, forcing the Fed to retaliate by increasing the interest rates banks charged each other, lowering the amount of money in circulation, and pushing inflation back to its 2 per cent target.

Inflation continued to rise stubbornly as the Fed maintained raising interest rates. The Fed raised 11 times over 2022 and 2023, from 0.08 per cent in 2021 to the current 5.35 per cent, the highest in 20 years.

Also Read: Govt Increases Wheat Allocation Under PMGKAY To 10.65 Million Tones; Details