The Federal Reserve announced on Wednesday that it would cut its benchmark interest rate to a target range of 4.75% to 5.00%. This is a half-percentage point reduction from the previous range of 5.25% to 5.50%. Before the rate cut, people had speculated whether the Fed would choose a large rate cut or a smaller adjustment of 25 basis points. In the early days of the COVID-19 pandemic, the Fed lowered interest rates to the lowest level to stimulate the economy, and then launched an aggressive policy tightening cycle in March 2022 to fight runaway inflation. After 11 rate hikes, the Fed has kept interest rates at their previous highs for more than a year.
