Why is a 50 basis point rate cut a positive?

First, this move breaks the market's fears of a recession. In the past, a small rate cut could be interpreted as the Fed's lack of confidence in the economic outlook. But the current weakness in the job market is well known, so the Fed's actions are more a response to the current situation rather than a harbinger of bad news.

In addition, compared with a 25 basis point rate cut, a 50 basis point rate cut is more likely to avoid market panic and overreaction, just as the small rate cut in March 2022 caused market turmoil. And, since the Fed has no meeting in October, taking a larger rate cut now can ensure the timeliness and effectiveness of the policy and avoid repeating the same mistakes.