The US Fed cut rates by half a percentage point semaphore

The US Federal Reserve cut interest rates by half a percentage point on Wednesday, signaling that the central bank wants to act more aggressively to keep the labor market from slowing too much. The latest jobs data rattled investors and some economists questioned whether the Fed waited too long to start cutting rates and overstepped its expected soft landing.

Traders had expected a big half-point cut ahead of the meeting, according to CME's FedWatch. Sentiment among economists shifted from a more modest quarter-point trim to a half-point cut earlier this month after better-than-expected jobs data raised concerns about an economic slowdown.

“We don't think we're lagging behind,” Fed Chair Jerome Powell said at a news conference after the announcement. “We think it's timely, but I think you can take it as a sign of not going back.”

The Fed has raised rates 11 times since March 2022, keeping the federal funds rate steady between 5.25% and 5.5% through August 2023, in an effort to control rising inflation — down from a recent high of 9.1% in June 2022 and 2.5% last month. %, close to the central bank's 2% target.