The Fed's interest rate decision in the early morning was a 50 basis point cut, which was the first rate cut by the Fed since 2020.
The Fed's rate cut this time was beyond expectations, perhaps to achieve a "soft landing" of the economy and hedge the risk of "stall" of economic activities!
Historically, unless encountering a major economic crisis, the Fed rarely cut interest rates by 50 basis points when starting a new rate cut cycle;
In the past 35 years, there have been only three times when the first rate cut was directly reduced by 50 basis points-the bursting of the Internet bubble in 2000, the subprime mortgage crisis in 2007, and the new crown crisis in 2020.
As you can see, these are all major crises. Previously, the Fed raised interest rates 11 times in a row from March 2022 to July 2023, with a cumulative rate hike of 525 basis points.
Over the past year, the Fed has maintained the target range of the federal funds rate between 5.25% and 5.5%, the highest level in 23 years!
