The US Federal Reserve started the long-awaited cycle of rate cuts by reducing the Fed funds rate by 50 basis points (one basis point is one-hundredth of a percent) in an 11-1 vote on Wednesday, with the lone dissenter recommending a 25bps cut.
What has driven the change? The Fed pursues a dual mandate of ‘maximum employment and price stability’. Its statement noted that risks to achieving its employment and inflation goals were “roughly in balance”, with progress on inflation, but slowing job gains and rising unemployment.
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