Federal Reserve Lowers Interest Rates by 25 Basis Points
The FOMC lowered interest rates by 25 basis points, emphasizing a commitment to “achieving maximum employment” and maintaining a 2% inflation target.
Current odds for an additional 25bps cut in December stand at 66%, according to CME Group’s federal funds futures markets data.
The FOMC's guidance remained unchanged, indicating confidence that interest rates will decrease another 25bps by the end of 2024. The committee stated it will assess incoming data and the evolving outlook when considering further adjustments to the federal funds rate.
No surprises from the meeting are expected to result in a mild extension of the current stock rally, as noted by Sevens Report Research founder Tom Essaye. He anticipates some digestion of the recent strong market movement, with expectations for a year-end rally driven by cyclical sectors such as industrials, financials, small caps, and energy, while tech and defensive stocks may lag.
Following the Fed’s decision, the S&P 500 rose by 0.6%, and the Nasdaq Composite increased by 1.3% shortly after 2 pm ET.