Federal Reserve Cuts Interest Rates By Half Percentage Point

As expected, the Federal Reserve cut interest rates today as central bankers continue a careful battle against rapid inflation. This is the first rate cut in four years. The federal funds rate establishes what banks charge each other for short-term loans. Today’s move will ease borrowing costs for consumers.

The Fed cuts interest rates by a half percentage point, an unusually large move that signals that central bankers think they are winning their war against inflation and are now turning attention to keeping the job market from weakening. @jeannasmialek https://t.co/r80yPi6JVr

— Peter Baker (@peterbakernyt) September 18, 2024

From the New York Times:

Fed officials slashed borrowing costs by half a percentage point, an unusually large reduction. The decision lowers rates to about 4.9 percent, down from a more than two-decade high.

The Fed’s move comes in response to months of fading inflation, and it is meant to prevent the economy from slowing so much that the job market begins to crack.

Officials have been keeping a cautious eye on a recent rise in the unemployment rate, and by starting off with a big cut, the Fed is effectively taking out insurance against a bigger employment slowdown.

Read the full report here. The Fed has indicated for months that this rate cut would happen when other factors like inflation and unemployment reached certain levels. We reached them. Republicans had apparently pushed back against the rate cut knowing it will help advance the economy – something they don’t want to see happen in the final months of a presidential election. Officials at the Fed also indicated they expect two more rate cuts this year, depending on economic factors.

BREAKING: The Fed cuts interest rates by a half point — an aggressive move designed to cushion the economy from a further slowdown. @bcheungz explains what it means for the economy.

READ: https://t.co/OO9kM5rI0J pic.twitter.com/eprtNo3vPl — MSNBC (@MSNBC) September 18, 2024