On the 18th local time, the Federal Reserve announced that it would lower the benchmark interest rate target range by 50 basis points to 4.75%-5%, which was the first rate cut since March 2020. In the past four years, the Federal Reserve has raised interest rates 11 times, and the benchmark interest rate has continued to increase from 0%-0.25% to 5.25%-5.5%.

Historically, almost every round of interest rate cuts has been accompanied by a recession in the US economy.

In this chart of the US Effective Federal Funds Rate, the red shaded area is the period when the National Bureau of Economic Research determines that the United States is in a recession.

It can be seen that from the oil crisis in the 1970s, the savings and loan crisis in the 1980s, the Internet bubble at the turn of the century, to the global financial crisis in 2008 and the global COVID-19 pandemic in 2019, every time the Federal Reserve cut interest rates sharply, it was highly coincident with the shadow range of the recession.

This is why rate cuts are sometimes seen as a "signal of economic weakness" - the Fed usually cuts rates when the economy is in trouble, trying to stimulate economic recovery through looser monetary policy

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