INDIANA – On Wednesday, in a significant shift for the US economy, the Federal Reserve announced a jumbo-sized interest rate cut for the first time in four years.
This is the first rate cut since March 2020. The half-point move will lower borrowing costs on everything from mortgages to credit cards.
The decision to cut by half a point, which wasn’t unanimous, telegraphs to the world that central bankers feel a sense of urgency to provide the US economy with swift relief from elevated borrowing costs, considering there were blaring calls in recent days for the Fed to kick off the rate-cutting cycle with a bang.
The half-point move is a major economic milestone in the central bank’s long fight against inflation and for Americans battling a higher cost of living since the COVID-19 pandemic.
In a news conference after the announcement, Head Chair Jerome Powell said the decision did not represent any new pattern for the central bank but that Fed officials want to keep the economy, especially the labor market, in good shape.
In response to the central bank’s announcement, markets surged, but by the closing bell, all three major indexes—the S&P 500, the Nasdaq, and the Dow—had moved into the red.
