Wed Sep 18 03:58:46 UTC 2024: ## Fed Expected to Cut Rates Today, Investors Await Powell’s Guidance
**New York, September 18, 2023** – The Federal Reserve is expected to announce a rate cut today, marking the first such reduction in four years. The decision, to be announced at 2 pm ET by Fed Chair Jerome Powell, comes amidst uncertainty regarding the US economy and labor market conditions.
The Fed’s benchmark rate, last hiked in July 2023 to 5.25%-5.5%, has remained unchanged since. While recent inflation data suggests a modest cut of 0.25% is likely, investors are keenly watching the Fed’s rate path projections and Powell’s subsequent press conference at 2:30 pm for clearer guidance on future policy direction.
While a cut is anticipated, some economists warn against aggressive reductions, fearing it could hinder labor market growth. Conversely, a significant deterioration in the labor market could force the Fed to implement more drastic cuts, potentially signaling a weakening economy and impacting corporate earnings.
Markets are currently forecasting at least a 50-basis-point cut before the year’s end. “The focus remains not on what the Fed will do, but what the Fed can do,” said Michael Brown, Senior Research Strategist at Pepperstone. “With the potential for further rate cuts and an end to quantitative tightening, the ‘Fed put’ remains strong, providing confidence for investors.”
This news comes as equity mutual funds have seen impressive returns, averaging above 15% CAGR over the past five years, with the exception of international equity schemes. Today’s announcement from the Fed will likely have a significant impact on both the stock market and the wider economy, with investors closely watching for any indication of future policy shifts.
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