2024-08-24
The interest rate for the Fed’s overnight intra-bank lending rate currently
stands at 5.25% to 5.5%, the highest in 23 years, after a series of increases
aimed at cooling off the economy.
In a pivotal move, the Federal Reserve Chair, Jerome Powell, on
August 23, 2024, announced a much-anticipated interest rate cut is coming in
September 2024.
He gave a keynote address speech at the Fed’s annual retreat in
Jackson Hole, Wyoming. Powell has noted that “the time has come” for
interest rate reductions, acknowledging that inflation is easing while the job
market is weakening.
The Fed has left interest rates unchanged at the last Federal Open
Market Committee meeting but signaled openness to a cut at the upcoming session
on September 17-18.
The decision, driven by cooling inflation and a slowing labor
market, immediately lifted investor sentiment.
Major U.S. stock indices, including the S&P 500 surges 1.15% and
Nasdaq surges 1.47% following the announcement, with rate-sensitive sectors
like construction and solar energy leading the gains.
Cryptocurrencies also rallied as the rate cut spurred renewed
investor interest in digital assets, seen as a hedge against fiat currency
devaluation.
Bitcoin and other major cryptocurrencies experienced notable
upticks, further fueled by expectations of a prolonged period of lower rates.
Bitcoin price increases 5.15% and Ethereum price increases 2.98%
following Powell’s announcement.
This rate cut marks a significant shift in monetary policy,
signaling a potentially favorable environment for equities and
cryptocurrencies.
