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after concluding a two-day monetary policy meeting, the u.s. federal reserve announced on the 18th local time that it would lower the target range of the federal funds rate by 50 basis points to a level between 4.75% and 5.00%. this is the first interest rate cut by the federal reserve since march 2020, and it also marks the shift of monetary policy from a tightening cycle to an easing cycle.

at a press conference held after the meeting, federal reserve chairman powell said that the 50 basis point rate cut was a "powerful action", and said that the federal reserve did not think that "the rate cut was slow", but rather believed that it was a "timely move."

powell pointed out that the personal consumption expenditure price index has fallen from a high of around 7% to 2.2% in august, indicating that inflation has "ease significantly." however, he also pointed out that while inflation is falling, the u.s. job market has shown some signs of weakness, with average monthly job growth of 116,000 in the past three months, significantly lower than earlier this year. at the same time, the unemployment rate has risen to 4.2%.

as inflation has not fallen as fast as expected, the fed has kept the target range for the federal funds rate at 5.25% to 5.5% since the end of july last year, the highest level in 23 years. in recent months, as the inflation situation in the united states has further eased and the job market has shown signs of weakness, the fed has faced pressure to shift its policy.