September 18th Fed Rate Cut

Extracted Attributes

• Date

  2024-09-18

• Policy Type

  Monetary Policy Easing

• Rate Change

  -50 basis points

• First Rate Cut Since

  March 2020

• New Federal Funds Rate Target

  4.75%-5.00%

Timeline

• The Federal Reserve announces a 50 basis point cut to the federal funds rate, setting the new target range at 4.75%-5.00%. (Source: Web Search Results)

  2024-09-18

• Federal Reserve Chairman Jerome Powell holds a press conference to discuss the rate cut. (Source: Web Search Results)

  2024-09-18

• Vice President Kamala Harris praises the rate cut as "welcome news." (Source: Web Search Results)

  2024-09-18

• David Sacks critiques the rate cut as a "significant policy error" on the All-In Podcast. (Source: Related Documents)

  2024-09-18

• US equities initially jump following the announcement but become volatile and decline by the end of the trading day. (Source: Web Search Results)

  2024-09-18

• The new federal funds rate target of 4.75%-5.00% is implemented. (Source: Web Search Results)

  2024-09-19

Inflation

In economics, inflation is an increase in the average price of goods and services in terms of money. This increase is measured using a price index, typically a consumer price index (CPI). When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation corresponds to a reduction in the purchasing power of money. The opposite of CPI inflation is deflation, a decrease in the general price level of goods and services. The common measure of inflation is the inflation rate, the annualized percentage change in a general price index. Changes in inflation are widely attributed to fluctuations in real demand for goods and services (also known as demand shocks, including changes in fiscal or monetary policy), changes in available supplies such as during energy crises (also known as supply shocks), or changes in inflation expectations, which may be self-fulfilling. Moderate inflation affects economies in both positive and negative ways. The negative effects would include an increase in the opportunity cost of holding money; uncertainty over future inflation, which may discourage investment and savings; and, if inflation were rapid enough, shortages of goods as consumers begin hoarding out of concern that prices will increase in the future. Positive effects include reducing unemployment due to nominal wage rigidity, allowing the central bank greater freedom in carrying out monetary policy, encouraging loans and investment instead of money hoarding, and avoiding the inefficiencies associated with deflation. Today, most economists favour a low and steady rate of inflation. Low (as opposed to zero or negative) inflation reduces the probability of economic recessions by enabling the labor market to adjust more quickly in a downturn and reduces the risk that a liquidity trap prevents monetary policy from stabilizing the economy while avoiding the costs associated with high inflation. The task of keeping the rate of inflation low and stable is usually given to central banks that control monetary policy, normally through the setting of interest rates and by carrying out open market operations.

Web Search Results

• Live updates: First Fed rate cut since Covid

  # Jumbo-sized rate cut: Fed slashes rates by a half percentage point Federal Reserve Chairman Jerome Powell speaks during a news conference following the September meeting of the Federal Open Market Committee at the William McChesney Martin Jr. Federal Reserve Board Building on September 18, 2024 in Washington, DC. The Federal Reserve announced today that they will cut the central bank’s benchmark interest rate by 50 basis points to a new range of 4.75%-5%. ## What we covered here ## [...] He previously said it would be a “big mistake” for the Fed to cut before the election but said that he’s since changed his views on that because of the worsening economic conditions. ## Kamala Harris praises Federal Reserve rate cut as “welcome news” Vice President Kamala Harris delivers remarks at the Congressional Hispanic Caucus Institute's 47th Annual Leadership Conference on Wednesday, September 18, in Washington, D.C. [...] The Federal Reserve on Wednesday cut interest rates by a jumbo half-point, marking its first rate cut since March 2020. While stocks initially jumped on the news, the trading session became volatile as investors worried that the large cut signals that the central bank is concerned that the US economy will weaken further.

• September 2024 Fed Meeting: Fed Cuts Rates by Half ...

  References ---------- 1. Board of Governors of the Federal Reserve System, “Federal Reserve Issues FOMC Statement.” (September 18, 2024) 2. Ibid. 3. Ibid. 4. Ibid. 5. Board of Governors of the Federal Reserve System, “Summary of Economic Projections” (September 18, 2024). 6. Ibid. 7. Ibid. 8. Board of Governors of the Federal Reserve System, “Transcript of Chair Powell’s Press Conference Opening Statement” (September 2024). 9. Ibid. [...] Market reaction --------------- U.S. equities were initially higher in the afternoon following the Fed’s announcement on September 18, as stocks made an intra-day all-time high, while bond yields – especially at the short end – moved lower. However, by the end of the day, the S&P 500 declined by 0.29%, the Dow Jones Industrial Average declined by 0.25% and the Nasdaq declined by 0.31%. In early trading on Thursday, the market was up big, with S&P 500 futures in the green by 1.5%. [...] meeting, the Federal Reserve (Fed) lowered interest rates by 50 basis points, easing monetary policy for the first time in four years due to progress on the Fed’s dual mandate. This lowers the interest rate target to a range of 4.75% to 5%.1

• FOMC Press Conference September 18, 2024

  sides of our dual mandate. In light of the progress on inflation and the balance of risks, at today's meeting, the Committee decided to lower the target range for the federal funds rate by ½ percentage point to 4 percent to 5 percent. This recalibration of our policy stance will help maintain the strength of the economy and the labor market and will continue to enable further progress on inflation as we begin the process of moving toward a [...] Fed President John Williams, that they were sort of saying that maybe a gradual approach was going to win the day. I mean, I sort of want to ask a seven-part question about this. But, I mean, could you talk-would you have cut rates by 50 basis points if the market had been pricing in, like, low odds of a 50 point move like they were last Wednesday, you know, after the CPI number came out? It was a really small probability of a 50 point cut. Does that play in your [...] pace, we want to keep it there. That's, that's what we're doing. MICHELLE SMITH. Sorry-Nick. NICK TIMIRAOS. Nick Timiraos of the Wall Street Journal. Chair Powell, does today's action constitute a catch-up in action given recent substantial revisions to the employment data, or is this larger-than-typical rate cut a function of the elevated nominal level of the policy rate such that an accelerated cadence could be expected to continue? CHAIR POWELL. Okay, multiple questions

• When is the next Fed interest rate decision? - Equals Money

  As of the July 29–30, 2025 FOMC meeting, the Federal Reserve (Fed) held the federal funds rate steady at 4.25%–4.50% and gave no clear signal on when rate cuts might begin. While some market participants had anticipated a potential cut in September, Chair Jerome Powell’s post-meeting comments cast doubt on that timeline, causing the probability of a September cut to fall below 50%. [...] ​The Federal Reserve's next interest rate decision is scheduled for September 17th, 2025, at 2:00 PM Eastern Time (ET), which corresponds to 6:00 PM Coordinated Universal Time (UTC). Following the announcement, Fed Chair Jerome Powell will hold a press conference at 2:30 PM ET (6:30 PM UTC) to discuss the decision and provide insights into the Fed's economic outlook. ‍ ## When will the Fed lower interest rates? [...] | FOMC Meeting Date | Rate Change (Bps) | Date Implemented | Federal Funds Rate | | --- | --- | --- | --- | | 30/07/2025 | - | - | 4.25% to 4.50% | | 18/06/2025 | - | - | 4.25% to 4.50% | | 07/05/2025 | - | - | 4.25% to 4.50% | | 19/03/2025 | - | - | 4.25% to 4.50% | | 29/01/2025 | - | - | 4.25% to 4.50% | | 18/12/2024 | -25 | 19/12/2024 | 4.25% to 4.50% | | 07/11/2024 | -25 | 08/11/2024 | 4.50% to 4.75% | | 18/09/2024 | -50 | 19/09/2024 | 4.75% to 5.00% |

• Fed's Bowman doubles down on her dissent - The Hill

  Futures markets are currently predicting a quarter-point rate cut in September, but there’s more uncertainty in those markets than usual. The CME Fed Watch prediction algorithm is showing an 83 percent chance of a cut next month. That formula is usually within just a few percentage points of a consensus forecast. [...] Economists have made similar observations regarding the labor supply, suggesting that the employment conditions are stronger than the July jobs report let on. In that case, a September rate cut following the hot producer price index report from earlier this month could be inflationary.