The Federal Reserve cut interest rates by 50 basis points on Wednesday in the final meeting of the Federal Open Market Committee (FOMC) before the November election.
The cut was larger than most economists predicted and larger than the usual 25 basis point increment by which the FOMC typically moves. The rate cut is the first for the Federal Reserve in over four years since after the onset of the COVID-19 pandemic.
The cut reflected FOMC board members’ concern over recent Labor Department data that showed the labor market in a much weaker state than previously thought. Inflation remains higher than the Fed’s 2% target rate — the consumer price index rose 0.2 points in August to 2.5%. Officials cited the Fed’s dual mandate to fight inflation while encouraging full employment to justify its decision to cut rates, however.
“This recalibration of our policy stance will help…
