The US Federal Reserve announced a half-point rate drop in its keenly anticipated monetary policy announcement.
As traders processed the Federal Reserve’s sizable interest rate cut, which moved to lower borrowing costs in the largest economy in the world for the first time in more than four years, major stock indexes soared and the currency declined on Wednesday.
More than the customary quarter-point adjustment, the U.S. central bank slashed the overnight rate by half a percentage point, expressing increased confidence that inflation will continue to decline to its 2% annual objective. The current range for the overnight rate, which determines how much interest banks pay one other and impacts consumer rates, is 4.75%–5.00%.
In a high-profile address this month in Jackson Hole, Wyoming, Chairman Jerome Powell expressed confidence among Fed officials that inflation has been substantially subdued. It fell to 2.5 percent last month, barely above the Fed’s 2 percent objective, from a peak of 9.1 percent in June 2022.
Officials at the central bank are now more concerned with supporting a contracting labor market and accomplishing an uncommon “soft landing,” in which it reduces
