The Fed’s interest rate cut explained
On September 18th, the Federal Reserve made a notable decision to reduce interest rates by half a percentage point, bringing them down to between 4.75% and 5%. This marks the first cut since the Fed raised rates to combat inflation, signaling the beginning of a monetary-easing cycle.
The move reflects confidence that inflation will soon become less of an issue and acknowledges the need for measures to bolster the labor market. The Fed was late in raising rates in 2022. This time, it hopes that starting with a bigger cut will steer the economy towards a soft landing, avoiding the recession which many analysts once thought inevitable.
