New Delhi: The US Federal Reserve on Wednesday slashed the policy rate by 50 bps, in a policy action that was more aggressive than expected and is likely to bring cheer to Indian markets on Thursday. We are now where we expect to be, said Powell, while assuring that the Federal Reserve was keeping its options open.
Federal Open Market Committee statement: https://t.co/WdWoB5Wf7M #FOMC
— Federal Reserve (@federalreserve) September 18, 2024
There is a wide range where the realistic range of the policy rate will fall. The Fed aims to continue to reduce restrictions while keeping an eye on the economy. The July stance was guided by lower unemployment and higher inflation. Today’s stance is calibrated to the rise in unemployment and inflation being a little above 2 per cent. The policy direction is towards a sense of neutral, said Powell.
To be sure the 50 bps rate cut proceeded from an excellent discussion. All 19 participants pencilled in multiple cuts, said Powell. He said the US Fed was not in a rush to cut rates and was looking at signs of confidence. The logic of the rate cut was clear from an economic as well as risk management standpoint, he said.
The Fed’s intention is to keep the US economy in good shape growing at a solid pace with labour markets in good shape and inflation on the downtrend, added Powell. The US Fed action is timely, he said. All FOMC attendees, including Powell, voted in favour of a 50 bps rate cut while Michelle W Bowman voted against the action, preferring a 25 bps rate cut. With this action, the US Fed’s policy rate has come down from 40-year highs to 4.75-5 per cent.
How Wall Street reacted to the rate cut
US indices were in green after the US Fed Chair’s rate cut announcement.
Dow Jones up 0.05 per cent
S&P 500 up 0.47 per cent
Nasdaq up 0.50 per cent
Gold spot rates jumped 0.98 per cent to $2,617.70 per ounce on the Comex. The path to higher gold prices has been left wide open by the US Fed, said Saxo Bank’s head of commodity strategy Ole S Hansen.
US Fed rate cut: The US Federal Reserve slashed the policy rate by 50 bps to 4.75-5 per cent citing improvement in the jobs scenario and a moderation in inflation. Wall Street indices were in green at the time of the announcement while gold prices surged. Biz News Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
