Is the Fed signaling a market crash? Why the 50 bps rate cut feels like 2007 all over again🫣 #FED #FedBeigeBook

Why did the Fed cut rates by 50 bps, the largest since 2020? What hidden dangers are they trying to prevent, and could this backfire on the economy?

Table of Contents

Fed drops a “bomb”

Stocks and crypto in green

Looming concerns surrounding the financial markets

Fed drops a “bomb”

On Sep. 18, the U.S. Federal Reserve made a move that turned heads across the financial world—it slashed its benchmark interest rate by 50 basis points (bps), marking the first cut since the pandemic hit in March 2020.

This adjustment brought the rate down to a range of 4.75% to 5%, a larger drop than many analysts had expected. For context, the rate had previously been at a 23-year high, hovering between 5.25% and 5.50%.

The Fed’s decision comes right after some positive news on the inflation front. In August, U.S. consumer price inflation dropped to its lowest point since February 2021, settling at 2.5% — slightly below the forecasted 2.6%.