Federal Reserve Cuts Interest Rates by 50 Basis Points

The Federal Reserve has cut interest rates by 50 basis points for the first time since 2020, lowering the benchmark rate to a range of 4.75-5 percent. Fed Chairman Jerome Powell defended the decision, asserting it was a proactive measure to support the economy rather than a reaction to economic pressures, despite some economists suggesting the Fed appears reactive. The central bank's projections indicate a potential for two more 25 basis point cuts later this year, with unemployment expected to rise to 4.4 percent, signaling concerns about labor market conditions. Powell dismissed claims that the timing of the rate cut was politically motivated ahead of the presidential election, emphasizing the Fed's independence. Inflation forecasts have also been revised downward, with expectations of a 2.3 percent increase in the Personal Consumption Expenditures index for 2024. Overall, the Fed remains committed to navigating the complexities of economic growth while addressing inflation and employment challenges.