Wall Street Slides As US Central Bank Lowers Key Interest Rate By 0.25 Per Cent, Reduces 2025 Cut Outlook

The US Federal Reserve announced a quarter-point interest rate cut on Wednesday (18 December), while signaling a reduced pace of future cuts, leading to a sharp downturn in financial markets.

The Federal Reserve's policymakers voted 11-to-1 to lower the US central bank's key lending rate to a range of 4.25 to 4.50 percent, aligning with market expectations, according to an official statement.

The Fed further surprised markets by revising its outlook for next year, cutting the expected number of quarter-point rate reductions from four, as projected in September, to just two.

Wall Street's three major indices ended the day significantly lower, while US Treasury yields rose sharply as traders processed the likelihood of elevated interest rates persisting in the coming years.

Powell expressed optimism about the US economy, stating the Federal Reserve is "significantly closer" to concluding its current cycle of monetary easing.

This rate decision marks the final one before Democratic President Joe Biden transitions out of office, paving the way for Republican Donald Trump, whose economic agenda includes increased tariffs and the large-scale deportation of illegal immigrants.

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