Federal Reserve Cuts Interest Rates by 50 Basis Points

The U.S. Federal Reserve has initiated its first interest rate cut in over four years, reducing the federal funds rate by 50 basis points to a target range of 4.75% to 5%. This unexpected move aims to stimulate the economy amidst concerns about a weakening labor market and muted hiring intentions, with market expectations now leaning towards further cuts this year. Fed Chair Jerome Powell emphasized that this decision should not be interpreted as the beginning of a series of aggressive rate reductions, suggesting a cautious approach moving forward. Following the announcement, U.S. stock indices experienced significant volatility, initially rising but ultimately closing slightly lower. Analysts note that while the rate cut is intended to support economic activity, the effects may lag, and the Fed's projections indicate increasing unemployment risks. The decision comes amid a backdrop of political scrutiny, particularly during the ongoing U.S. election campaign, reflecting the delicate balance the Fed must maintain in its monetary policy.