Teh Federal Reserve has decided to cut the cost of money in the United states by 25 basis points, bringing the rate to a range of 4% and 4.25%. The federal Open Market committee also signaled intentions to lower interest rates two more times this year, for a total of half a percentage point, according to the Dot-Plot, which represents the voting intentions of committee members. This is the frist rate cut since December 2023. At Wall Street, only the Dow Jones continues to show positive movement, while Nasdaq and S&P 500 remain in the red.
The euro is trading above $1.19, reaching a four-year high following the Fed’s decision, currently at 1.1904 against the greenback – levels not seen as July 2021. The yield on US government bonds at 10 years has decreased by 1.5 basis points to 4.009%, and the 2-year yield, which typically reflects expectations for Fed interest rates, has fallen by 1.5 points to 3.495%.
The decision was widely anticipated by analysts. The Stoxx 600 has lost over 1%,driven by rate-sensitive sectors like banks and insurance companies. Futures contracts suggest a further loosening of approximately 0.75 percentage points over the next six months. The market has largely priced in this expectation, with the S&P 500 reaching a series of historic highs and not experiencing a clear weekly decline since the end of July.