NEW YORK, Sept 20 – The U.S. Federal Reserve cut interest rates by half of a percentage point on Wednesday, amid cooling inflation and in an effort to head off a weakening labor market.
It is the first cut to the federal funds rate since March 2020, bringing its target range to 4.75 percent to five percent and signaling the start of an easing cycle.
Following the rate cuts, U.S. stocks closed the day with modest losses. The Dow Jones Industrial Average sank 0.25 percent, while the S&P 500 and the tech-heavy NASDAQ Composite Index fell 0.29 percent and 0.31 percent, respectively.
Several central banks in the Gulf regions, including Saudi Arabia, the United Arab Emirates and Qatar, have followed the Fed’s lead on rate moves, as most oil and gas exporters tend to do with their regional currencies pegged to the U.S. dollar.
In an analytical piece ahead of the Fed’s Federal Open Market Committee meeting, Matt Weller, the global head of Market Research at GAIN Capital, noted that the market was nearly evenly split on whether the Fed would cut interest rates by 25 or 50 basis points.
This level of market uncertainty ahead of the Fed meeting, unseen in the past decade, points to the arguable failure of the Fed’s policy, he wrote.
