Thu Sep 19 05:57:38 UTC 2024: ## US Fed Cuts Rates by 50 Basis Points, Ending 14-Month Pause

**Washington, D.C.** – In a significant shift, the US Federal Reserve (Fed) has announced a 50-basis point (bps) reduction in the federal funds rate, marking the first cut since March 2020. This decision ends a 14-month period of holding rates steady and signals a new phase of monetary easing.

While the cut was welcomed by markets, Fed Chair Jerome Powell cautioned against interpreting it as the start of a rapid easing trend. He stressed that the Fed will proceed cautiously, making decisions on a meeting-by-meeting basis, and remains committed to achieving price stability without triggering significant unemployment.

The move follows months of market speculation and comes as inflation shows signs of cooling. While the Fed remains confident in the US economy’s strength, Powell acknowledged the possibility of a higher neutral rate than previously anticipated.

The decision to cut rates was not unanimous, with FOMC member Michelle Bowman dissenting in favor of a 25 bps cut.

FOMC members project additional rate cuts of 25 bps in November and December, followed by a 100 bps reduction in 2025 and another 25 bps cut in 2026. This would bring the federal funds rate to a range of 2.75-3.00 per cent by the end of the easing cycle.

**Expert Opinions on the Impact:**

Financial experts have expressed a range of views on the implications of the Fed’s decision. Most believe that the Reserve Bank of India (RBI) will likely follow suit with a rate cut in its December policy meeting.

Some experts view the cut as a positive move for equity markets and the overall economy, while others highlight the potential risks associated with aggressive monetary easing.

While the immediate impact of the Fed’s move remains to be seen, it is likely to influence global investor sentiment and could potentially impact emerging markets, including India. The upcoming months will be crucial in observing the broader economic trajectory and the Fed’s future policy decisions.

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