The Fed cut rates by half-point: What to know
The Claman Countdown panelists Gabriela Santos and Kenny Polcari analyze the impact of the Federal Reserve rate cut move.
The Federal Reserve on Wednesday cut interest rates for the first time since March 2020, as the central bank lowered the benchmark federal funds rate by 50 basis points amid progress in the fight against inflation.
The cut was larger than the 25 basis point cut forecast by LSEG economists, though interest rate traders saw a 64% probability of a 50 basis point cut as of Tuesday, according to the CME FedWatch tool. With the 50 point cut, the Fed lowered the target range for the federal funds rate to 4.75% to 5% – down from 5.25% to 5.5%.
«Our economy is strong overall and has made significant progress toward our goals over the past two years,» Fed Chair Jerome Powell said in a press conference after the announcement.
«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%.»
FEDERAL RESERVE CUTS INTEREST RATES BY HALF-POINT; FIRST RATE REDUCTION IN FOUR YEARS
Federal Reserve Chair Jerome Powell cited progress in slowing inflation as factoring in to the Fed's rate cut. (Photographer: Michael Nagle/Bloomberg via Getty Images / Getty Images)
Inflation slowed to 2.5% in August based on the Labor Department's consumer price index (CPI), which is above the Fed's 2% target but showed a continued easing of inflationary pressures and was down nearly half a point from the 2.9% headline reading in July.
The Fed's policymaking arm estimated in its summary of economic projections that the personal consumption expenditures (PCE) index, the
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