Fed Cuts Fed Fund Rate by 25 Basis Points in First Reduction Since December

The Federal Reserve has returned to easing mode after ten months of taking a wait and see approach on the U.S. economy.

In a widely expected move on Wednesday, the U.S. central bank cut its benchmark fed funds interest rate range by 25 basis points to 4%-4.25%, the lowest since December 2022.

The Fed acknowledged that economic growth in the first half of the year "moderated" and the job market has "slowed."

The decision follows growing signs that the U.S. labor market has begun to decisively weaken, the latest being the August employment report which showed the addition of just 22,000 jobs to the economy and the unemployment rate rising to 4.3%, the highest since 2021.

Alongside that data, revisions to previous months' reports showed far less jobs had been created than previously thought.

Added to that was political pressure in the form of President Trump's repeated criticisms of the Fed’s hesitancy to act in the face of what he insists has been softening inflation.

Markets react

In the minutes following the rate cut, the price of bitcoin (BTC) rose about 1%.

Major U.S. stock indexes — which have been repeatedly carving out record highs for weeks ahead of the Fed move — also rose on the news.

Federal Reserve Chairman Jerome Powell's post-meeting press conference begins in a few minutes and markets will be watching closely for what informed today's decision as well as what the central bank will looking at in future policy meetings.