The US Federal Reserve on the 18th of December announced to slash the interest rate by 25 basis points or (1/4) quarter of a percentage point to 4.25 – 4.50 percent. The decision was taken after being voted 11 to 1 during the Federal Open Market Committee meeting that lasted for two days. This is estimated to be the third straight policy reduction announcement this year by the Central Bank of the United States. After the declaration of US Federal Rates, markets like Dow Jones as well as S&P saw the biggest percentage fall since the 5th of August this year. This article brings everything you must know about the Dow Jones Stock Markets after US Fed Rate along with the latest updates.
Dow Jones Stock Markets After US Fed Rate: The Fall
The Dow Jones Industrial Average on the 19th of December fell straight from 1,123.03 points, or 2.58 percent, to 42,326.87, still declining for the tenth day, marking the longest losing streak since the year 1974. The S&P 500 also witnessed a record fall of 2.95 percent and the Nasdaq Composite also fell down to 3.56 percent to 19,392.69. The CBOE VIX volatility index rose as high as 74 percent while the 10-year US treasury yield surged up to 4.5 percent.
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Dow Jones Stock Markets Hints For Lower Cut Rates in 2025
While the US Federal Reserve declared the slashing of the interest rate by 25 basis points, lower cuts in the upcoming year have also been hinted at. The US Fed, in its official statement, also mentioned that it may lower rates twice in the upcoming year, however, the timing remains under wraps. Jerome Powell, the chair of the US Federal Reserve, made a statement after the meeting in which he explained that they had lowered their policy rate by a full percentage point, making it less restrictive, and that they can be furthermore cautious while considering the further adjustments.
Difference Of Opinions
According to the chair of the US Federal Reserve, Jerome Powell, the latest cuts in the interest rate were a “closer call,” and the latest inflation readings were the only biggest factor that was on the minds of the members. However, the Cleveland Fed President Beth Hammarck disagreed with the decision and wanted the US Fed to maintain the same rates.
GDP and Inflation Forecasts For 2025
The rates for the Gross Domestic Product, often abbreviated as GDP, has also been pushed up to 2.5%, which is just half a percentage higher than what it was in the month of September. However, according to the officials, it may slow down to its long-term projection of 1.8%. The Inflation estimates have also been pushed up to 2.8%, which was 2.5% in the month of September.
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Monitoring Implications
The official statement from the US Fed also mentioned that it would be closely monitoring the implications and impact of the decision ensuring that it will be adjusting the monetary policy in case of the emergence of risks that may delay or prevent the committee from attaining its goals. The statement also mentioned that the committee will keep reducing its holdings over the treasury securities as well as the agency debt and agency mortgage.
Committee’s Take On The Policies of Trump
The newly elected US President, Donald Trump, hinted about his plans for tax cuts, tariffs, as well as mass deportations which can significantly increase inflation. However, the chair of the US Fed mentioned that the committee needs more time to carefully assess and evaluate the policies and their implementations.
