Big News! The Federal Reserve Cuts Interest Rates!

　　On Wednesday, the Federal Reserve lowered the benchmark interest rate by 50 basis points to a new range of 4.75%-5.0% and plans to cut rates two more times this year and four times by 2025. This marks the first easing of monetary policy since 2020 and ends the most aggressive anti-inflation measures since the 1980s.

　　At the conclusion of the two-day policy meeting, officials made this decision with a divided vote.

　　Image source: Yahoo Finance

　　This rate cut follows similar actions in the Eurozone, the UK, and Canada, highlighting the global economy's sensitivity to monetary policy adjustments. The U.S. economy accounts for about 30% of the global economic total, and its ability to effectively escape monetary tightening while avoiding an economic slowdown will have far-reaching implications for the future of the global economy.

　　Many economists had originally predicted a rate cut of 0.25%, so the 0.5% reduction was unexpected. Financial markets quickly reacted, with interest rates falling and the dollar depreciating, while the yen briefly rose from around 142 yen to 140 yen against the dollar.

　　Fed Chair Jerome Powell stated at a press conference on the same day that the July U.S. Personal Consumption Expenditures (PCE) price index had dropped to a year-on-year increase of 2.5%, indicating significant progress in price control. He confidently remarked, “Compared to other central banks, our patience in cutting rates has finally paid off.”