Why the Federal Reserve has gambled on a big interest-rate cut
The bold move carries economic and political risks
The Federal Reserve’s decision on September 18th to lower interest rates by half a percentage point, to between 4.75% and 5%, is momentous. As the first cut by America’s central bank since it lifted rates to quell inflation, the shift marks the start of a monetary-easing cycle. It also represents a bet that inflation will soon be yesterday’s problem and that action is required to support the labour market. For the first time since 2005, one of the Fed’s governors in Washington dissented from the decision. Michelle Bowman preferred to cut rates by a quarter-point.
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This article appeared in the Finance & economics section of the print edition under the headline “Noise cancelling”
Finance & economics September 21st 2024
- The world’s poorest countries have experienced a brutal decade
- Why the Federal Reserve has gambled on a big interest-rate cut
- The Federal Reserve’s interest-rate cuts may disappoint investors
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- European regulators are about to become more political
- What the history of money tells you about crypto’s future
From the September 21st 2024 edition
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