Federal Reserve⁤ Implements Major Cut in Base Interest Rate for the First Time in⁣ 4 Years and 6 Months

The US central bank, the Federal Reserve (Fed), has implemented an aggressive policy of lowering the base ‍interest⁣ rate ⁣by 0.5 percentage ⁢points for the first time⁢ in 4 years​ and 6 months, changing the direction of the high interest rate policy it ​had maintained since the post-pandemic period.

The​ US Federal Reserve announced⁣ in a statement immediately‌ after⁣ the regular September‍ meeting‌ of the Federal Open Market Committee (FOMC) at 2 pm (local time) ‌on⁢ the 18th, “We⁢ will cut the US benchmark ‌interest rate ​by ⁤0.5 percentage points to 4.75-5.0%.” In addition, through the dot ‌plot and ​the⁤ economic forecasts, it was predicted​ that the base interest rate at the end of this year would be⁤ 4.4%.

This decision can be interpreted as reflecting the⁤ Federal⁢ Reserve’s will to react preemptively to the economic situation in the United States, where ⁣employment has begun to cool down. The Federal Reserve began to raise the base interest rate, which had been held at 0.25% ​(maximum) ‌since March 2020, to 0.5% in March 2022, raised ⁤to ​5.5% in July 2023, and held⁢ for one year and two months.

Market Reaction⁤ and Expectations

On ⁣Wall ⁢Street, it has long been clear ‍that the Federal Reserve will cut interest ‍rates at this September meeting. ⁤This is‍ because the​ US inflation figure is getting closer to the 2% ‌target that the Federal Reserve has ⁤suggested, and market fears of ‌an ⁤economic hard landing have increased as statistics​ continue to show that employment‍ cooling faster‍ than expected.

Federal Reserve Chairman Jerome Powell also indicated an interest rate cut through comments at previous⁤ events. ⁢On‌ the 23rd ‌of last ‌month, he attended the⁤ Jackson⁤ Hole⁤ Economic​ Symposium held by the Federal Reserve Bank of Kansas City, Missouri, USA, and said, “The time for adjusting monetary policy has arrived.”

Global⁢ Financial Market Impact

The global financial market,⁤ including Korea, is also expected to experience⁤ chain changes as the basic⁤ interest ⁤rate‍ policy of the United⁤ States, which has had a direct impact on‍ the interest rate policies ⁢of all countries’ central banks, is officially transformed.

Supporters of baby cuts argued that rising inflation‌ remained in the US economy and​ that the‍ recent‌ decline in employment ⁤indicators was ‍just a process of normalizing the overheated market. On the other hand,‍ the ‍supporters of ‌the big break ‌were of the position that an active and preemptive response ‍was necessary because the‌ US⁢ economy had already entered ​a recession.

In particular, Wall Street experts have predicted that the current​ US ⁣economy requires an aggressive response and that it ⁣is more likely⁢ that⁢ the​ Federal Reserve will cut‍ the rate⁣ by⁣ 0.5 percentage points.