Reviewed by Gotrade Internal Analyst
Jakarta, Gotrade News - The Federal Reserve decided to slash the benchmark interest rate by a quarter-point to around 3.60% on Wednesday. This strategic move was taken to keep the labor market stable while dealing with the lingering challenge of inflation.
Keytakeaways
- The Fed lowered the benchmark interest rate to 3.60% to prop up a weakening labor market.
- The stock market rallied, with the S&P 500 up 0.7% and the Dow Jones jumping 1%.
- Fed officials signaled a potential pause on rate cuts as current levels are considered neutral.
The S&P 500 index immediately responded positively to the decision, jumping 0.7% and edging closer to an all-time high. The stock market welcomes lower borrowing costs because, essentially, it has the potential to boost economic growth moving forward.
Market Response and Stock Movers
Shares of Palantir Technologies Inc. climbed 3.3% thanks to positive sentiment from an AI program contract with the US Navy. Conversely, AP News reported that GameStop Corp. dipped 4.3% as their quarterly earnings missed expectations.
Jerome Powell, the Fed Chair, hinted that the central bank might hit the pause button on rates in the near future. AP News noted Powell's statement that current rates are already close to a "neutral" level for the economy.
Rate Policy Direction and Economic Stability
The latest economic projections show that Fed officials are anticipating just one more cut next year. Three officials cast dissenting votes, signaling some internal debate regarding the direction of future monetary policy.
Powell emphasized that the labor market currently carries significant downside risks for the public. Government data shows job growth is slowing down sharply, sparking further concerns about the overall health of the economy.
Referensi:
- AP News, Federal Reserve cuts key rate, sees healthier economy next year. Accessed on December 11, 2025
- AP News, US stocks rise after the Fed cuts rates and hopes build for more. Accessed on December 11, 2025
- Featured Image: Shutterstock
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