September 19, 2024
The Federal Reserve cut the federal funds rate by half a percentage point on September 18, the Fed’s first rate cut since early 2020.
The central bank announced it would lower the federal funds rate by 50 basis points to a range of 4.75 percent to 5 percent while it now turns its attention to rising unemployment. The August jobs report showed a net gain of 142,000 jobs and unemployment at 4.2 percent. The central bank predicted the unemployment rate will increase to 4.4 percent and stay there.
In August, inflation rose 2.5 percent, the smallest 12-month increase since February 2021. Core inflation, which excludes food and energy prices, rose 3.2 percent and increased 0.3 percent monthly in August.
It’s anticipated that the Federal Reserve will continue cutting rates this year. It indicated that if the economy evolves as expected, the federal funds rate could be brought to 4.4 percent at the end of 2024 and 3.4 percent by the end of 2025.
Click here to read the transcript of Fed Chairman Jerome Powell.