Fed Signals Interest Rate Cuts as Inflation Eases

The Federal Reserve, after much anticipation, has signaled its intention to begin cutting interest rates. This decision comes after over a year of rate hikes aimed at combating high inflation. The Fed`s chair indicated that the pace of these cuts will be determined by economic data, suggesting a gradual approach unless recession risks increase. This move is expected to positively impact consumer sentiment and reinforce the belief that inflation is under control. The Fed`s aggressive rate hikes, while necessary to curb inflation, negatively impacted President Biden`s approval ratings due to their effect on consumer borrowing costs. With inflation showing signs of decline, the focus has shifted to when the Fed would begin cutting rates. This has led to market volatility driven by speculation over the timing of these cuts.