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the u.s. federal reserve announced on september 18 local time that it would lower the target range of the federal funds rate by 50 basis points to between 4.75% and 5.00%. this is the first interest rate cut by the fed in four years.

in addition, according to the fed's forecast, the u.s. federal funds rate will reach 4.4% at the end of this year, that is, the target range of 4.25% to 4.5%, and will fall to 3.4% by 2025 and is expected to fall to 2.9% by 2026.

the federal reserve is scheduled to hold a monetary policy meeting on september 17-18. federal reserve chairman jerome powell said in late august that the time has come to cut interest rates, almost "explicitly" indicating that the federal reserve will announce a rate cut at its september monetary policy meeting.

data released by the u.s. department of labor on the 11th showed that the u.s. consumer price index (cpi) rose 2.5% year-on-year in august, 0.4 percentage points narrower than in july. this is the smallest increase since february 2021, showing signs of continued slowdown in inflation. at the same time, the u.s. labor market continued to weaken. also according to the department of labor data, the number of layoffs in the united states increased to 1.76 million in july, the highest level since march 2023.

the federal reserve has raised interest rates 11 times from march 2022 to july 2023, with a cumulative increase of 525 basis points. over the past year, the federal reserve has maintained the target range for the federal funds rate between 5.25% and 5.5%, the highest level since 2023.

the median of the fed's dot plot shows that the fed will cut interest rates by 100 basis points in total in 2024. after the 50 basis point cut in september, there is an expectation of another 50 basis point cut. the fed is expected to cut interest rates by another 100 basis points in 2025, the same as the rate cut expected in the june dot plot.