*US Fed lowered Fed Funds rate by 50bps*

⚫️ The US Federal Reserve implemented a 50bp rate cut, marking its first since the onset of the COVID-19 pandemic, bringing the federal funds rate to a target range of 4.75%-5.00%.

⚫️ We believe the more aggressive stance indicates that policymakers are taking a proactive approach to alleviate economic pressures and prevent further slowing in the labour market.

⚫️ The US FOMC revised its quarterly economic forecasts, raising the median projection for unemployment at end-2024 to 4.4% from the previous 4.0% in June. This indicates a slight deterioration from the current 4.2% level. Chair Powell previously noted that any further labour market cooling would be "unwelcome."

⚫️ Projections released after the two-day meeting revealed a narrow majority, with 10 out of 19 officials favouring a further rate reduction of at least 50bp across the remaining two FOMC meetings in 2024.

⚫️ The matrix of individual officials' expectations indicated an additional 100bps in rate cuts by end-2025, followed by a further 50bps reduction in 2026.