Federal Reserve Cuts Rates

Federal Reserve Chairman Jerome Powell announced a quarter-percentage-point cut in benchmark rates yesterday, bringing the range to between 4.25% and 4.5%. The central bank also lowered rate cut projections for 2025, anticipating two cuts, down from four. 

Yesterday’s announcement marks the third and final rate cut of 2024, following a half-point cut in September and a quarter-point cut last month. Since a hiring slowdown in the early fall, the job market appears to have stabilized, reducing the case for aggressive cuts. Inflation has also proved stubborn, with consumer prices up 2.7% year-over-year last month, above the Fed’s 2% target—another reason the central bank appears positioned to slow its pace of interest rate cuts. 

US stock markets saw steep drops (S&P 500 -3.0%, Dow -2.6%, Nasdaq -3.6%) after yesterday’s revised outlook. The Dow experienced its first 10-day losing streak since 1974.

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