US FOMC Announces Interest Rate Decision at 3.5%

Summary

The FOMC announced a 25bps rate cut, lowering the federal funds rate to a range of 3.5% to 3.75%, with a 9-3 vote. This decision reflects concerns over economic conditions, including rising unemployment and inflation risks.Wallstreetcn+ 3

Impact Analysis

So the FOMC cut rates by 25bps to 3.5%, which was widely expected. The interesting part is the internal division—9 votes for, 3 against—and the cautious tone about future cuts. Powell’s comments about higher thresholds for further cuts suggest they’re worried about inflation sticking around longer than hoped. This move is a balancing act between supporting a weakening labor market and managing inflation risks. For the portfolio, this means we should be cautious about sectors sensitive to interest rates, like financials, which might not see the relief they hoped for. On the flip side, sectors like tech and consumer discretionary might get a short-term boost from lower borrowing costs. But the market’s already priced in this cut, so any significant moves will likely hinge on future economic data and Fed communications.Calculated Risk+ 4