Federal Reserve cuts interest rates by 25 basis points

Published On Nov 7, 2024, 3:25 PM

The Federal Reserve has announced a rate cut of 25 basis points, lowering the benchmark rate to a range of 4.5%-4.75%. This is the second rate reduction in a short period, following a larger cut in September. The Fed aims to support stable prices and maximize employment amid mixed economic signals, including persistent inflation and a problematic job market. While inflation is nearing the Fed's target, concerns about economic conditions and potential impacts of Trump administration policies were raised. Fed Chair Jerome Powell emphasized that future decisions will depend on upcoming economic data.

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Stock Forecasts

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Positive

The rate cut is expected to stimulate investment in growth-sensitive sectors, particularly technology and consumer discretionary stocks, as lower borrowing costs can increase consumer and business spending.

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Negative

Conversely, financial stocks may face headwinds due to reduced interest margins from lower rates, potentially leading to a negative outlook for banks and other lenders.

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