U.S. Fed Eases Monetary Policy with 25-Point Rate Cut as Labor Market Softens

• The Federal Reserve lowered rates by 25 bps to 4.5%-4.75%, easing policy amid slower inflation.
• Fed Chair Powell confirms U.S. election results won’t impact the Fed’s near-term policy decisions.
• Bitcoin hits new highs, stocks rise as Fed’s rate cut fuels optimism in financial markets.

The U.S. Federal Reserve cut its benchmark federal funds rate by 25 basis points to 4.5%-4.75%. This is the latest of many attempts the Fed has made in recent years to balance its desire for economic growth. 

It also has pushed for inflation control. This move comes as other central banks such as Sweden and Britain have also cut interest rates to ease pressures on their economies.

According to the Fed’s latest report, labor market conditions in the U.S. have been showing signs of softening this year. The unemployment rate has risen slightly, but is historically low. While inflation appears to be moving closer to the Fed’s target of 2 percent, it remains above the desired level.

Powell Comments on Market Impact

Jerome Powell, head of the Federal Reserve, stressed that near term policy decisions of the Fed would not be influenced by recent U.S. election results. Although there will be political changes, he said the Fed’s main focus remains on economic policy. Powell also noted that the labor market remains somewhat tight, though easing conditions have reduced concerns about runaway inflation.

The Fed’s reduction aligns with its September decision to cut rates by 50 basis points. However, Powell reiterated that despite these recent adjustments, monetary policy remains restrictive. He added that future decisions would rely on economic indicators, particularly inflation trends and employment rates.

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Financial Markets React to Fed Decision

Following the rate cut, major financial indices responded positively. The price of Bitcoin surged to $76,951, setting a new high. U.S. stock indices saw similar gains, with the S&P 500 up 0.8% and the Nasdaq climbing by 1.5%.

The Fed reiterated its willingness to continue addressing risks while maintaining economic stability. He concluded by noting that incoming data would guide future rate cuts. He noted that there are no immediate plans for further reductions, signaling a careful approach to economic changes.