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In a significant shift in monetary policy, the Federal Reserve has implemented its first cut to the federal funds rate since March 2020. The central bank lowered the target range for interest rates to 4.75%–5%, down from the previous range of 5.25%–5.5%. This marks a pivotal moment, as rates had reached their highest level since 2001, maintained since last July.
This rate reduction comes in response to the continued moderation of inflation, the very factor that initially led to the surge in interest rates. The Federal Reserve’s decision to lower rates suggests that inflationary pressures are easing, allowing for a more flexible monetary stance to foster economic stability.
Experts view this move as a potential signal of a broader pivot in the Fed’s policy, as it balances the need for economic growth with concerns about inflation.
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