What's happened
On September 18, 2024, the Federal Reserve announced a 0.5 percentage point cut to its key interest rate, lowering it to a range of 4.75% to 5%. This marks the first rate cut in over four years, aimed at supporting the economy amid signs of a cooling job market and easing inflation.
Why it matters
What the papers say
According to Sky News, the Fed's decision to cut rates reflects growing concerns about the job market, stating, "Officials signalled that further cuts were likely to follow before the end of the year." The Independent highlights that this is the first rate cut in over four years, emphasizing the Fed's confidence in easing inflation. BBC News notes that the cut is larger than many analysts expected, indicating a shift in focus from inflation to employment concerns. Axios reports that the Fed's aggressive half-point cut aims to address evident weaknesses in the job market, with projections suggesting further reductions may occur in upcoming meetings.
How we got here
The Fed's decision follows a series of 11 rate hikes since March 2022, aimed at combating inflation that peaked at 9.1% in June 2022. Recent data indicated inflation has decreased to 2.5%, while unemployment has begun to rise, prompting concerns about economic slowdown.
Common question
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How Will the Recent Federal Reserve Rate Cut Affect the Economy?
On September 18, 2024, the Federal Reserve made headlines by cutting interest rates for the first time in over four years. This decision has raised numerous questions about its implications for the economy, inflation, and various sectors. Below, we explore the most pressing questions surrounding this significant monetary policy change.
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