The Federal Reserve has shifted back to an easing stance after ten months of observing the U.S. economy with caution.
In a widely anticipated decision on Wednesday, the U.S. central bank lowered its benchmark federal funds interest rate range by 25 basis points to 4%-4.25%, the lowest level since December 2022.
The Fed acknowledged that economic growth in the first half of the year has “moderated” and that the job market has “slowed.”
This decision comes amidst increasing indications that the U.S. labor market is showing significant signs of weakness. The most recent August employment report revealed the addition of only 22,000 jobs, while the unemployment rate climbed to 4.3%, the highest point since 2021.
Furthermore, revisions to prior months’ reports indicated that far fewer jobs were created than previously estimated.
In addition, political pressure has mounted due to President Trump’s ongoing criticisms of the Fed’s reluctance to act despite what he describes as softening inflation.
Market Response
Shortly after the rate cut, the price of bitcoin (BTC) surged by approximately 1%.
Major U.S. stock indexes—which have consistently reached record highs in anticipation of the Fed’s move—also experienced an uptick following the announcement.
Federal Reserve Chairman Jerome Powell’s press conference after the meeting is set to begin soon, and markets are keenly awaiting insights into what influenced today’s decision and the factors the central bank will consider in upcoming policy meetings.
