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Fed Cuts Rates by 50 bps: Global Markets React

Fed Cuts Rates by

The US Federal Reserve made a bold move by cutting interest rates by 50 basis points, exceeding Wall Street’s expectations. This marks the first rate reduction in four years, bringing the benchmark rate down to 5% from its 23-year high of 5.5%. The decision surpassed predictions of a smaller 25 bps cut, as the central bank opted for more aggressive action to support the economy.

Policymakers indicated that further cuts could be on the horizon, with the rate expected to reach 4.5% by December. The Fed also hinted at the possibility of reducing rates to 3.5% in 2025, contingent on favorable inflation and employment trends. This forward guidance highlights the Fed’s commitment to stabilizing economic growth and ensuring recovery.

Global markets reacted swiftly to the news. Gold soared to a record high of $2,600 per ounce, reflecting investor demand for safe-haven assets amid lower borrowing costs. Meanwhile, the US dollar index plunged to a low of 100.50, its weakest point since July 2023, as the dollar faced selling pressure.

Bitcoin experienced volatility, hovering around $60,000 as traders absorbed the implications of the rate cut. Cryptocurrency markets remained active, with investors adjusting their positions in response to the Fed’s actions and the potential for a looser monetary environment.

Stock markets surged across the globe, with traders optimistic about the Fed’s strategy. The prospect of lower interest rates is expected to provide the economy with more affordable capital, fostering growth and encouraging investment.

 

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