On the 18th (local time), when the US central bank, the Federal Reserve (Fed), aggressively cut the base interest rate by 0.5 percentage points for the first time in 4 years and 6 months, the New York Stock Exchange closed lower. In a situation where the Fed’s base interest rate cut was already expected, it is interpreted that the market was wary of whether there were enough concerns about the US economy to warrant a high interest rate cut rather than welcoming the Fed’s “big cut.” In addition, it is evaluated that the fact that Fed Chairman Jerome Powell indicated that he would not rush to ease policy, such as by saying, “Don’t assume that big cuts will continue in the future,” had an impact.
On this day, the New York stock market showed an upward trend, with the Dow Jones Industrial Average renewing its all-time high immediately after the Fed’s interest rate “big cut” was announced at 2 p.m., but it continued to rise and fall and eventually closed lower. The Dow Jones Industrial Average closed at 41,503.10, down 103.08 points (0.25%) from the previous day, the S&P 500 Index, which is centered on large-cap stocks, closed at 5,618.26, down 16.32 points (0.29%), and the Nasdaq Index, which is centered on technology stocks, closed at 17,573.30, down 54.76 points (0.31%). CNBC reported that “traders initially welcomed the huge rate cut, but it soon raised concerns that the Fed was trying to avoid being left behind by a potential economic slowdown.”
Meanwhile, the interest rate cut that day led to a political debate. Republican presidential candidate Donald Trump has insisted that interest rates should not be lowered before the presidential election in November. He said that lowering interest rates would win over voters and benefit the Democratic Party, the current ruling party. AFP reported that day that Trump said, “If the Fed is not playing politics, this shows that the economic situation is so bad that interest rates need to be lowered that much.”
Meanwhile, US President Joe Biden and Democratic presidential candidate Kamala Harris both welcomed the announcement. President Biden wrote on X (formerly Twitter) that “we have reached a critical moment,” adding that “the economy remains strong, inflation and interest rates are falling.” Harris said, “This announcement is welcome news for Americans who have been hit hard by high prices,” adding that “we know that prices are too high for the middle class and working families. We will continue to focus on lowering prices.”
New York = Correspondent Im Woo-sun [email protected]
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2024-09-19 03:46:15