The Federal Reserve cut interest rates for the first time since the beginning of the pandemic, lowering borrowing costs by a half-point in a move that should bring relief to households and businesses straining under elevated rates.
The aggressive move suggests officials are trying to ease pressure off the economy and keep the job market from slowing any further.
The Federal Open Market Committee chose to lower its key overnight borrowing rate by a half percentage point, or 50 basis points, amid signs that inflation was moderating and the labor market was weakening.
This was the first interest rate cut since the early days of the Covid pandemic.
Except for the emergency rate cuts during the Covid pandemic, the last time the FOMC cut by half a point was in 2008 during the global financial crisis.
The benchmark rate now sits between 4.75 and 5 percent.
The Fed’s September meeting was one of the most heavily anticipated of the year.
The bank faced pressure to start cutting rates in July, but did not although inflation has been easing toward normal levels, which lenders, investors and economists expect to continue.
But the central bank is also under pressure to make sure high rates don’t slow the job market even more than it already has.
Fed Chair Jerome H. Powell is expected at a news conference where he’ll be pressed for his diagnosis of the economy.
Even more cuts could happen before the end of the year, according to Fed officials’ median forecast for where they believe interest rates should be.
Their forecast called for rates getting slashed by half a point more this year, according to the Summary of Economic Projections, also referred to as the “dot plot,” which was released today.
The Fed has two remaining meetings this year in November, right after Election Day, and December.