Interest rate cut welcomed by economists

Federal Reserve Bank's aggressive 50bp rate cut largely supported by market, although some believe inflation may come through anyway

Economists have largely welcomed the US interest rate cut on 18 September, although some believe the 50 basis point drop might have been too aggressive. The Federal Reserve Bank's decision to cut rates by 50 bps to 4.75% last month rather than the normal 25 surprised investors worldwide. The bank said the cut was to forestall the wider economic impact of recent problems in financial markets and also to promote moderate growth over time. In the period after the cut, the S&P 500 initially rallied strongly, rising from around 1470 to 1520 on the following day, although it has since begun to ...