US stock markets surged following the Federal Reserve’s significant cut to interest rates, with major indices nearing record highs. The move was welcomed by investors who had anticipated a reduction in rates and saw it as a sign that the Fed is confident about controlling inflation without triggering a recession.
Wall Street is moving towards records as a delayed jubilation sweeps markets worldwide following the Federal Reserve’s big cut to interest rates.
It was a momentous move, closing the door on a run where the Fed kept its main interest rate at a two-decade high in hopes of slowing the US economy enough to stamp out high inflation. Now that inflation has come down from its peak two summers ago, Chair Jerome Powell said the Fed can focus more on keeping the job market solid and the economy out of a recession.
That bolstered hopes that the Federal Reserve can successfully walk its tightrope and get inflation fully under control without a recession. So too did a couple of reports on the economy released Thursday. One showed fewer workers applied for unemployment benefits last week, another signal that layoffs across the country remain low.
Some investment banks raised their forecasts for how much the Federal Reserve will ultimately cut interest rates, anticipating even deeper reduction than Fed officials. Federal Reserve officials on Wednesday released forecasts showing they expect to cut interest rates by potentially another half of a percentage point in 2024 and another full point in 2025. The federal funds rate is currently sitting in a range of 4.75 per cent to 5 per cent.
History may also offer few clues about how things may progress given how unusual the conditions are. This looks to have the most aggressive expectations for rate cuts out of any past easing cycles, according to strategists at Bank of America.
Federalreserve Interestrates Stockmarket Economy Inflation
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