The results of the Federal Open Market Committee (FOMC) meeting, which investors have been waiting for a long time, were finally announced early this morning with a 50 basis point interest rate cut.
The Federal Reserve (Fed) lowered interest rates from 5.50% to 5.00% for this September meeting.
After more than 4 years, this first rate cut was seen as aggressive but coincided with expectations on the CME FedWatch indicator percentage before the meeting took place.
After the rate decision was announced, the focus was entirely on the follow-up speech by Fed Chairman Jerome Powell.
Commenting on the decision, he stated that FOMC members have finally gained high confidence to start easing monetary policy.
This is based on an assessment of the job market as well as the inflation rate which is on track to reach the central bank's 2% target.
Powell also saw no indication that the United States (US) economy was at risk of recession, thus prompting the option for aggressive policy easing.
Markets now expect a few more follow-up interest rate cuts for the next meeting until the end of 2024.
However, when questions were put to Powell, he said that decisions would be made from one meeting to another.
The meeting members are not in a hurry and will evaluate the latest economic data and decisions will be made according to the situation whether interest rates will continue to be lowered, raised again, or kept unchanged.
The US dollar weakened significantly after the decision to cut interest rates by 50 basis points was announced, but was seen to recover after the end of the conference.
