Thu Sep 19 07:15:52 UTC 2024: ## US Fed Cuts Interest Rates by 50 Basis Points, Boosting Global Markets
**New Delhi, September 19:** The US Federal Reserve, America’s central bank, has slashed interest rates by 50 basis points, bringing the rate to a range of 4.75% to 5%. The move, announced by Fed Chair Jerome Powell following a two-day Federal Open Market Committee (FOMC) meeting, marks the first rate cut since 2020.
The decision comes on the back of a strengthening US economy, a stabilizing labor market, and a significant decline in inflation, which has fallen from 7% to below 3%. With inflation nearing the Fed’s target of 2%, the rate cut was widely anticipated. While most analysts expected a 25 basis point cut, the Fed opted for a more aggressive 50 basis point reduction.
All 12 members of the FOMC voted in favor of the rate cut, with 11 supporting the 50 basis point reduction and one member advocating for a smaller 25 basis point cut. The Fed has hinted at further interest rate cuts in the future, potentially continuing through 2026.
The rate cut has triggered a positive response in global markets, including India. While historically, a US rate cut has initially led to negative reactions in the Indian stock market, this time, both the Nifty and Sensex indices have reached record highs. Large-cap stocks have particularly benefited from the positive sentiment.
Interestingly, the rate cut has also had a surprising impact on gold. Typically, falling interest rates lead to increased demand for gold. However, on Thursday, gold prices dipped, indicating a deviation from the usual market trend.
The Fed’s decision reflects its commitment to maintaining a stable and healthy US economy. The impact of this move on global markets and individual economies will be closely watched in the coming months.
First Piper 