Historic decision from the Federal Reserve! They have lowered interest rates after 54 months.

The Federal Reserve, reducing its policy rate by 50 basis points, lowered it from 5.5% to 5%.

HISTORIC DECISION FROM THE FED YEARS LATER

The Federal Reserve (Fed) has concluded the interest rate decision that global markets have been eagerly awaiting. Ending a period that lasted for about 4 years, the Fed made a historic decision.

REDUCED INTEREST RATE BY 50 BASIS POINTS

As expected by the markets, the Fed made its first move in the easing cycle and implemented a 50 basis point reduction in the policy rate. The interest rate was lowered from 5.5% to the range of 4.75-5%.

The emphasis on economic activity in the decision text drew attention. The text stated, "The Committee gained more confidence that inflation is moving sustainably towards 2% and decided that the risks to achieving employment and inflation goals are roughly balanced," and emphasized that officials are strongly committed to bringing inflation back to their targets as well as "supporting maximum employment."

TIGHT STANCE IN MONETARY POLICY LASTED FOR 4 YEARS

Fed had previously made emergency interest rate cuts twice in March 2020 due to increasing concerns about the economic effects of the COVID-19 pandemic. The bank had raised interest rates to the highest level in 23 years by making consecutive interest rate hikes after March 2022 to fight inflation. Fed had signaled in the July meeting that an interest rate cut was imminent by stating that inflation was moving towards the target.

Fed Chairman Jerome Powell had conveyed the message at the Jackson Hole meeting last month that it was time to adjust monetary policy. This message was perceived as the Fed starting the easing cycle at the September meeting.