Wed Sep 18 13:23:00 UTC 2024: ## Fed Expected to Cut Interest Rates for First Time in Over Four Years
**WASHINGTON** – The US Federal Reserve is poised to cut interest rates on Wednesday for the first time since 2019, in a move that is likely to have a significant impact on global financial markets.
The decision comes as inflation in the US has begun to ease, moving closer to the Fed’s target of 2%. The central bank’s recent statements, including from Chair Jerome Powell, have indicated a rate cut is imminent.
The interest rate cut will directly impact the rates at which commercial banks lend to consumers and businesses, influencing the cost of borrowing for mortgages, credit cards, and other loans.
While the Fed has confirmed a rate cut, the magnitude of the reduction remains uncertain. Some economists predict a smaller quarter-point cut, while others believe a larger half-point decrease is more likely.
A smaller cut would offer a more predictable path, while a larger cut could stimulate demand but also risk reigniting inflation.
“It’s around points of inflection that we get the most mixed signals,” said Erica Groshen, a senior economics advisor at Cornell University. “The Fed is trying to make sense out of them, and the markets are trying to make sense out of them, and trying to make sense out of how the Fed will interpret them.”
Futures traders currently see a 63% chance of a half-point cut and a 37% chance of a quarter-point cut, according to CME Group data.
A rate cut of any size would signal the Fed’s commitment to bringing inflation back to target after it reached a 40-year high in 2022. This move is expected to be followed by commercial banks, reducing borrowing costs and potentially stimulating the US economy.
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