Powell Set to Deliver First Fed Rate Cut in Nine Months
After keeping interest rates steady for nine straight months, Federal Reserve Chair Jerome Powell is now preparing to deliver a long-awaited rate cut. The decision comes as the US economy shows signs of cooling, with job growth weakening and pressure building for policy support.
The expected 25 basis points (bps) rate cut is widely seen as the Fed’s first step toward easing financial conditions. For months, the central bank held a firm stance, focusing on controlling inflation, which remains higher than the 2% target. But now, the spotlight has shifted to the labor market, where slowing job creation is raising concerns about the strength of the recovery.
The move signals that Powell and policymakers are balancing two risks — persistent price pressures and rising unemployment risks. While inflation is still elevated, it has cooled enough for the Fed to begin offering relief. Traders in the Forex market, bond market, and stock market are watching closely, as this decision could set the tone for global financial flows in the coming months.
On Wednesday, the Fed will also release its new quarterly projections, which will give investors a clearer picture of how divided policymakers are and whether more cuts could follow later this year. Any signs of a consensus for additional easing could weigh further on the US Dollar (USD) while supporting currencies like the Euro (EUR) and Japanese Yen (JPY).
Impact:
The Fed’s first rate cut could boost risk assets and weaken the US Dollar. However, uncertainty remains over how many more cuts Powell and his team might deliver in 2025.
