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investingLive Americas FX news wrap 10 Dec:Fed is well positioned after 25 bp cut.
Key Takeaways (30s Read)
The Fed cut rates by 25bps, adopting a neutral policy stance.
The Fed cut rates by 25 basis points, bringing the rate to between 3.5% and 3.75%. The cut was anticipated to be hawkish, but it came across as neutral as Chair Powell emphasized that the Fed is 'well-positioned'. The vote was 9-3, with dissent from Governors Goolsbee and Schmid, and a call for a deeper cut from Governor Miran.
During the press conference, Powell stated that the policy is now in a plausible range of neutral, with no preset path and decisions remaining data-dependent. The labor market is softening gradually, but there are no signs of a sharp downturn. Consumer spending remains strong, contributing to a positive market reaction, with indices like the Dow and S&P 500 seeing substantial gains. Following the cut, the USD weakened against major currencies, including a 0.58% drop against the EUR and JPY.
AI Analyst
AI Opinion
"The Fed's decision to cut rates is highly significant for the financial markets. Powell's emphasis on a neutral stance provides temporary reassurance to investors. The positive reaction in the stock market post-rate cut reflects the sustainability of economic growth and a alleviation of inflation concerns. Meanwhile, the weakening USD against other currencies indicates that the Fed's stance is influencing market risk sentiment, and the upcoming data releases in the following weeks will drive further market movements. Investors need to pay attention to these data points and future Fed communications."
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