# Federal Reserve Cuts Interest Rates by 50 Basis Points

**Published:** 2026-09-12T14:59:08.499Z  
**Topic:** Fed Rates\  
**Sentiment:** neutral  
**Publisher:** TrendWatcher — https://www.trendwatcher.in/article/95724f92-84f3-4984-9442-e7f6013aa319

The Federal Reserve cut the federal funds rate by 50 basis points to 4.75%-5.00%. See how markets reacted to the first rate cut since March 2020.

The Federal Reserve lowered its benchmark interest rate by 50 basis points on September 18, 2024, marking the central bank’s first rate-cutting cycle in four years [2]. The move shifts the committee’s focus from inflation-fighting to preserving a labor market that officials describe as remaining in solid condition [2].

| At a glance | |
|---|---|
| Rate Cut | 50 basis points |
| New Target Range | 4.75% to 5.00% |
| S&P 500 Reaction | Record high |
| Last Cut Date | March 2020 |

## A pivot in policy
The decision to cut rates to a range of 4.75% to 5% ends a 14-month period during which the Fed held rates at a 23-year high [2]. The move was not unanimous; Governor Michelle Bowman dissented, favoring a smaller 25-basis-point reduction, marking the first time the committee has broken its streak of unanimous voting since June 2022 [2]. Fed Chair Jerome Powell stated that the decision was not influenced by political pressure, despite public demands from Donald Trump for lower rates to boost the economy [2]. Powell emphasized that the Fed’s actions are designed to balance the dual mandate of managing inflation while preventing unnecessary weakness in employment [2].

Markets responded positively to the announcement, with the S&P 500 reaching a record high on Wednesday [2]. The Nasdaq Composite and the Dow Jones Industrial Average also gained nearly 0.9% and 0.6%, respectively [2]. While Treasury yields fluctuated following the news, the rate-sensitive 2-year note saw its yield drop approximately 6 basis points [2].

## Future rate expectations
While the Fed’s official quarterly projections suggest a more measured approach—with nine of 19 members estimating the rate will end the year between 4.25% and 4.5%—traders are pricing in more aggressive action [2]. Market participants currently see a greater than 50% probability that the Fed will implement another 75 basis points of cuts by the end of the year, which would imply a 50-point reduction at one of the two remaining meetings [2]. Two committee members, however, do not expect any further cuts for the remainder of the year [2].

## What to watch
*   **Upcoming FOMC Meetings:** Monitor the policy statements and updated economic projections scheduled for the November and December meetings to see if the committee aligns closer to market expectations for further cuts [2].
*   **Labor Market Data:** Watch for incoming employment reports, as Chair Powell noted the committee will be carefully assessing data to determine if the current "solid" condition of the labor market is maintained [2].
*   **Inflation Progress:** Track whether inflation continues to approach the Fed’s 2% annual target, as officials remain wary that reducing policy restraint too quickly could hinder progress on price stability [2].

The Fed’s shift signals a transition away from the restrictive environment that defined the last year, but the divergence between official projections and market bets leaves the pace of future easing as the primary uncertainty for investors.

## Sources
1. WRAL.com Raleigh — [Wall Street week ahead: Federal Reserve decision on interest rates, retail sales...](https://www.wral.com/news/ap/f6341-wall-street-week-ahead-federal-reserve-decision-on-interest-rates-retail-sales-update/)
2. Investopedia — [Federal Reserve Cut Its Influential Interest Rate Today (Live)](https://www.investopedia.com/live-federal-reserve-september-meeting-interest-rate-decision-8714069)
3. 24/7 Wall St. — [Trump Issues Stark Threat To Federal Reserve: “Lower The Rate Or I’ll Stop Trading With Countries With Which We Have A Deficit”](https://247wallst.com/investing/2026/09/04/trump-issues-stark-threat-to-federal-reserve-lower-the-rate-or-ill-stop-trading-with-countries-with-which-we-have-a-deficit/)

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Cite as: TrendWatcher, "Federal Reserve Cuts Interest Rates by 50 Basis Points", https://www.trendwatcher.in/article/95724f92-84f3-4984-9442-e7f6013aa319