Federal Reserve’s Bold Rate Cut: A Strategic Shift Before Elections

The Federal Reserve has cut its benchmark interest rate by a significant half-point, marking its first rate cut in four years. This move aims to support the job market and reshape the economic landscape just weeks before the presidential election. The Fed signaled more rate cuts in the future while acknowledging progress in combatting inflation.

The Federal Reserve has executed a dramatic shift by cutting its benchmark interest rate by an unusually large half-point, its first rate cut in over four years. This significant move aims to bolster a slowing job market, a mere few weeks before Americans head to the polls for the presidential election.

The central bank lowered its rate to approximately 4.8%, down from a two-decade high of 5.3%. This marks an end to the high rates that have helped tame inflation, now down to 2.5% from a peak of 9.1% in mid-2022. The Fed's policymakers also indicated future cuts, potentially altering the economic outlook.

Fed Chair Jerome Powell highlighted that while the battle against inflation isn't fully won, the progress made so far warranted this policy recalibration. However, the rate cuts haven't fully alleviated public discontent with lingering high prices for essential goods. Future cuts are expected to lower borrowing costs for consumers and businesses, aiding economic growth.

(With inputs from agencies.)