Fed announces interest rate decision: First time since March 2020

The US Federal Reserve (Fed) has announced its interest rate decision. Following the September Monetary Policy Committee meeting, the Fed cut interest rates by 50 basis points. The US central bank lowered the policy rate by 50 basis points, bringing it to the 4.75-5.00 percent range.

LAST INTEREST RATE CUT WAS IN MARCH 2020

The Fed made two emergency interest rate cut decisions in March 2020 due to growing concerns regarding the economic impact of the Covid-19 pandemic. The bank had lowered the policy interest rate by 50 basis points to the 1-1.25 percent range on March 3, 2020, and to the 0-0.25 percent range on March 16, 2020.

Fed Chair Jerome Powell had stated that the risks posed by the Covid-19 pandemic to the US economy had changed significantly, and that they were easing their monetary policy stance to support the economy.

INTEREST RATE HIKE PROCESS

Facing high inflation in the US, the Fed completed its asset purchase operations in 2022 and began interest rate hikes, deciding to raise rates for the first time since 2018 with a 25 basis point increase at its March 2022 meeting.

In its May 2022 meeting, the Fed implemented its strongest interest rate hike since 2000 with 50 basis points, and since 1994 with 75 basis points in its June meeting, and increased the policy rate by the same amount in its July, September, and November meetings.

Having implemented 75-point interest rate hikes in 4 consecutive meetings in 2022, the Fed began to slow the pace of its rate hikes by opting for a 50 basis point increase again in the final meeting of that year.

The bank continued to slow the pace of its rate hikes with a 25-point increase in the first meeting of 2023. The Fed also raised the interest rate by 25 points in its March and May meetings.

At its June meeting, the Fed kept the policy rate steady for the first time in 15 months, leaving the interest rate in the 5-5.25 percent range.

With the increase in the July 2023 meeting, the Fed raised the policy rate to the 5.25-5.50 percent range, the highest range in 23 years, or since 2001.

Having carried out its 11th interest rate hike since March 2022, the Bank had raised the interest rate by a total of 525 basis points as of July 2023.

Since then, the Fed has ended its interest rate hike cycle and kept the policy rate steady in its meetings.

News Source: İHA