{"id":9840,"date":"2024-09-25T10:53:45","date_gmt":"2024-09-25T14:53:45","guid":{"rendered":"https:\/\/www.greaterlouisville.com\/?p=9840"},"modified":"2024-09-25T10:59:16","modified_gmt":"2024-09-25T14:59:16","slug":"investor-perspective-what-to-know-about-the-federal-reserve-interest-rates-cut","status":"publish","type":"post","link":"https:\/\/www.greaterlouisville.com\/general\/investor-perspective-what-to-know-about-the-federal-reserve-interest-rates-cut\/","title":{"rendered":"Investor Perspective: what to know about the Federal Reserve interest rates cut"},"content":{"rendered":"

Rob Hawkins, Chief Investment Officer for\u00a0I<\/a><\/em>ndependence Bank, shares his perspective, insights, and opinions on the recent cut of interest rates and what it will mean for the economy in the year ahead.<\/em><\/p>\n

Fed Cuts 50bps (0.50%), \u201cStrong Start\u201d to \u201cRecalibrate\u201d to Lower Rates<\/strong><\/p>\n

Market Reaction: The S&P 500 reached a new all-time high (5,690) upon announcement, but retreated to a loss at close (5,618 -0.3%) yesterday. Interest rates increased and the yield curve steepened. Despite the larger than expected 0.50% cut, stock and bond markets backed off of recent bullishness looking for stronger forward messaging on rate cuts.<\/p>\n

\u201cStrong Start\u201d<\/strong><\/p>\n

On Wednesday at 2PM the Federal Reserve announced it would cut the Fed Funds rate by 50bps (0.50%), ending the fastest and steepest level of interest rate tightening since the early 1980s (See Summary of Economic Projections [SEP] Table below). Despite stronger economic data in recent weeks, Fed Chair Powell sees the 50bps cut as a \u201cstrong start and a sign that [the committee] is\"\" confident that inflation will fall [to the target rate of 2%] enabling a larger cut.\u201d The time has come to \u201crecalibrate [policy] to neutral (lower) rates over time\u201d. There was only one dissent vote for a 0.25% rate cut, all others voted for 0.50%.<\/p>\n