BREAKING NEWS: Federal Reserve Cuts Interest Rates by 0.5%!

Summary

In today's video, the Federal Reserve announced a 0.5% interest rate cut, lowering the Fed funds rate to 5.0%. This marks a shift in monetary policy, with projections for further cuts in 2024, aiming to reach 4.5% by year-end. By 2026, rates could drop to 3.0%. The video also previews questions that will be asked at the Fed's upcoming press conference, including concerns about inflation and labor markets. More insights will follow in the next video, which will highlight key moments from the Fed Chair's press briefing.

Takeaways

• 📰 The Federal Reserve has cut interest rates by 0.5%, which marks the start of a shift in monetary policy.
• 📉 The interest rate has been reduced from 5.5% to 5.0%, with further cuts expected in the future.
• 📅 The Federal Reserve is projecting to cut rates to 4.5% by the end of 2024, 3.5% by the end of 2025, and 3.0% by the end of 2026.
• 📊 Investors and economists believed the Federal Reserve was behind the curve and should have started cutting rates earlier, prompting a 0.5% cut now.
• 💬 The Federal Reserve's chair, Jerome Powell, is about to hold a press conference to discuss the decision.
• 🔍 In the next video, a condensed version of Powell's press conference and key takeaways will be provided.
• ❓ Key questions expected at the press conference include concerns about the labor market, inflation, and the possibility of a soft landing for the economy.
• 📅 Many are eager to know what the Federal Reserve will decide at their November meeting, with the possibility of further rate cuts or a pause.
• 📈 The Federal Reserve will base future decisions on data, specifically inflation reports (PCE, CPI) and labor market data (jobs report, JOLTS report).
• 🙏 The speaker encourages viewers to stay updated, subscribe to the channel, and support future content.

Q & A

What is the breaking news discussed in the video?

The Federal Reserve has decided to cut interest rates by 0.5%.

What was the speaker's initial expectation regarding the interest rate cut?

The speaker initially expected the Federal Reserve to cut rates by a quarter point, not half a point.

Why is today's interest rate cut significant?

It marks the start of a shift in monetary policy, and is expected to be the first in a series of rate cuts.

What are the Federal Reserve's projections for interest rates by the end of 2024?

The Federal Reserve projects interest rates to drop to 4.5% by the end of 2024.

What are the projected interest rates by the end of 2025 and 2026?

The Federal Reserve projects interest rates to be 3.5% by the end of 2025 and 3.0% by the end of 2026.

Why did the Federal Reserve choose to cut interest rates by 0.5% instead of a smaller amount?

Many investors and economists believed the Federal Reserve was behind the curve and should have started cutting rates earlier, prompting a larger cut this time.

What is the Federal Reserve's current interest rate after the recent cut?

The current Federal Reserve interest rate is 5.0% after the 0.5% cut.

What factors will influence the Federal Reserve's decision on future rate cuts in November?

The Federal Reserve's decision will depend on inflation reports (PCE and CPI) and the labor market data (jobs and JOLTS reports).

What are some of the key questions expected to be asked at the Federal Reserve's press conference?

Questions include concerns about the labor market weakening, inflation re-accelerating, and the overall outlook for a soft landing.

What is the speaker's plan for the next video?

The speaker plans to condense the 50-minute Federal Reserve press conference into a 5-6 minute highlight video, offering their interpretation of what is discussed.

Outlines

00:00

📰 Breaking News: Federal Reserve Cuts Interest Rates

In this video, the presenter announces breaking news that the Federal Reserve has decided to cut interest rates by 0.5%, a surprising move as many expected a smaller 0.25% cut. This marks the beginning of a new monetary policy shift with further cuts expected. The presenter emphasizes that this is just the first cut in a series, projecting significant long-term impacts on the economy. While 0.5% may not seem substantial, continuous rate reductions are expected.

📊 Federal Reserve’s Economic Projections Explained

The presenter dives into the Federal Reserve’s Summary of Economic Projections (SCP). The FED has cut the interest rate from 5.5% to 5.0% and plans further cuts in 2024. By the end of 2024, the rate is expected to reach 4.5%, and by the end of 2025, 3.5%. By 2026, the rate is projected to decline further to 3.0%. The presenter highlights the market’s anticipation of a 0.5% cut and the concerns of investors and economists who believe the FED should have started the cuts in July.

📅 The Press Conference: What to Expect from Chair Powell

The Federal Reserve’s press conference, hosted by Chair Jerome Powell, will take place soon, where he will present his remarks followed by a Q&A session. The presenter plans to provide a condensed version of this 50-minute event, summarizing key points in a 5-6 minute video. Viewers are encouraged to watch this upcoming video for important information directly from the source.

❓ Press Conference Questions Preview

The presenter shares insight into the types of questions Powell is expected to face during the press conference. These include concerns about labor market weakening, inflation control, and the possibility of a soft landing. Many of these questions are described as difficult to answer. However, the key topic will likely revolve around the FED’s decisions for the November meeting, as market watchers speculate about deeper rate cuts or delaying them until December.

🔍 How to Predict the FED’s Next Move in November

The presenter explains how the Federal Reserve’s decisions in November will be determined by two major factors: inflation reports (PCA and CPI) and labor market data (jobs report and JOLTS report). Despite the FED's preference for the PCA inflation measure, the CPI remains relevant. The labor market conditions will also heavily influence future actions. Viewers are encouraged to stay tuned for updates as these reports are released.

👍 Closing Remarks and Call to Action

In closing, the presenter thanks the audience for their support and encourages them to subscribe for future updates. The presenter promises to keep viewers informed of further developments regarding the Federal Reserve's decisions and the economic consequences. Wishing everyone a great day, the presenter signs off.

Keywords

💡Federal Reserve

The Federal Reserve (often referred to as 'the Fed') is the central banking system of the United States. In the video, it plays a critical role as the authority responsible for setting interest rates, which is the main focus of the discussion. The Fed's decision to cut interest rates by 0.5% marks a significant shift in monetary policy.

💡Interest rate cut

An interest rate cut refers to a reduction in the benchmark interest rate set by the Federal Reserve. In this video, the Fed cuts the rate by 0.5%, signaling the beginning of a series of cuts aimed at stimulating economic activity. The narrator emphasizes the importance of this cut as a major shift in monetary policy.

💡Monetary policy

Monetary policy involves actions by central banks, like the Federal Reserve, to control the supply of money and influence economic conditions. The video highlights the shift in the Fed's monetary policy through the decision to cut interest rates, a tool used to manage inflation and economic growth.

💡SCP (Summary of Economic Projections)

The SCP is a report by the Federal Reserve that provides projections for future economic indicators such as interest rates, inflation, and growth. In the video, the SCP is mentioned in relation to the Fed's expectations for further interest rate cuts over the next few years, predicting a gradual decrease through 2026.

💡Inflation

Inflation refers to the rate at which prices for goods and services rise over time. Controlling inflation is a key concern for the Federal Reserve, as noted in the video. The Fed uses interest rate cuts as a tool to manage inflation, and the narrator discusses the potential for inflation to re-accelerate if not managed properly.

💡Soft landing

A soft landing is an economic scenario where the Federal Reserve successfully reduces inflation without causing a severe economic downturn. In the video, this term is mentioned as one of the key questions reporters are expected to ask the Fed chairman, reflecting concerns about the outcome of the rate cuts.

💡Labor market

The labor market refers to the supply of and demand for workers within the economy. The video mentions concerns about whether the labor market could weaken further, making it a key factor the Federal Reserve will consider in its future decisions on interest rates.

💡CPI (Consumer Price Index)

CPI is a measure of the average change over time in the prices paid by consumers for goods and services. It is one of the key indicators the Federal Reserve monitors to assess inflation. In the video, the CPI is mentioned alongside PCE as an important data point that will influence the Fed's decisions in upcoming meetings.

💡PCE (Personal Consumption Expenditures)

PCE is another measure of inflation that reflects changes in the prices of goods and services consumed by households. It is considered the Fed's preferred measure of inflation, as noted in the video, and will play a crucial role in determining future interest rate cuts.

💡J Powell (Jerome Powell)

Jerome Powell is the chair of the Federal Reserve. In the video, he is mentioned as the person leading the upcoming press conference where he will discuss the interest rate cuts and respond to questions from reporters. Powell's comments and decisions are central to understanding the direction of U.S. monetary policy.

Highlights

The Federal Reserve has decided to cut interest rates by 0.5%.

This marks the start of a shift in monetary policy, and more cuts are expected.

The interest rate cut is from 5.5% to 5.0%, with projections for further cuts in the future.

By the end of 2024, the Federal Reserve is projected to cut the interest rate to 4.5%.

The projection for the end of 2025 is an interest rate cut down to 3.5%.

By the end of 2026, the interest rate is projected to fall to 3.0%.

Many investors and economists felt the Federal Reserve was behind the curve on rate cuts.

Critics argued that the Federal Reserve should have started cutting rates in July.

The press conference will be hosted by Chair Jerome Powell, where he'll discuss the decision.

Powell will take questions from reporters after his prepared remarks.

Key questions will focus on labor market concerns, inflation risks, and the economic outlook.

The biggest question is about the Federal Reserve's plans for the November meeting.

The November meeting could involve deeper cuts or none at all, depending on economic data.

Powell's decision for November will be based on inflation reports (PCE and CPI) and labor market data.

A summary of the highlights from Powell’s press conference will be shared in the next video.

Transcripts

in today's video I have breaking news

for you the Federal Reserve has decided

to cut interest rates by

0.5% so I personally thought that they

would go with the quarter points but

they decided to do half a points but

regardless today marks the day of a

shift in monetary policy so as I said it

starts today so I want you to know that

this is just a start this is just the

first cut in a series of cuts to come so

if you're thinking okay an interest rate

cut of 0.5 % that's not much I will tell

you it's going to amount to a lot

because again they're going to keep on

cutting and this is just a start so I'm

going to give you the

numbers so of course today's very

important because we got the interest

rate cuts and because they released

their projections they released their

SCP their summary of economic

projections in their SCP here's what it

says the Federal Reserve is projecting

to cut interest rates further in

2024 today they cut the interest rate

the FED funds interest rate from

5.5% and now it's

5.0% they are projecting to cut it down

to

4.5% by the end of the year so that's

another half Point by the end of 2025 so

by the end of next year they project to

cut down interest rates to

3.5% by the end of 2026 they project to

cut it down to

3.0% so going into today's meetings the

odds were in favor as I showed you

yesterday it was in favor of a half

point cut the reason is that many

investors and economists they were

worried that the Federal Reserve is

behind the curve so basically what

happened is that many people are saying

that they should have started cutting

interest rates back at their July

meeting so to make up for it this

meeting people are saying that the

Federal Reserve should cut by 0.5% which

is what they did okay so here's what

happened now so the Federal Reserve is

going to hold their press conference in

a few minutes so that's going to be

hosted by J Powell he's the chair of the

Federal Reserve so he's going to talk

for about 50 minutes it's going to be

about 5 six minutes of his prepared

remarks and then the rest of it going to

be him taking questions Q&A with the

reporters so in my next video I'm going

to take that video that the 50 minutes

of content I'm going to condense it into

five about five six minutes of

highlights and then I'm also going to

give you my interpretation of what he's

saying so I think it's very important

that you watch that because I want you

to see the information coming straight

from the source so that's going to be my

next video I expect to have that out

tomorrow okay but I want to tell you

this we already see so many of the

questions that are going to be asked so

for example they're going to they're

going ask these questions are you afraid

of the labor markets further weakening

how confident are you that inflation

will not re

accelerate is the Outlook still a soft

Landing so I just want you to know that

these are all Bs questions because

they're unanswerable I mean how is po

supposed to respond to these but the

biggest question which is going to be

asked more than once that most people

want to know is what are they going to

do at the November meeting

because it could be they could decide to

not cut interest rates and cut deeper in

December or they can frontload it cut

deeper in November do nothing in

December or quarter point quarter point

right

so people are going to want to know

they're going to be trying to pry

information on Paulo regarding November

but Paul's going to say what he always

says he's going to say that for the

November meeting it's going to be their

decision has not been made they take a

meeting by meeting and it's going to be

data dependence but the way that I will

be determining how they're going to

react you know what they're going to do

in November it's really going to be

based off two things it's very

straightforward number one it's going to

be based off the inflation reports the

PCA and CPI inflation reports so I

understand that core pce that's the

fed's preferred measure of inflation

right but I'm telling you and they've

said this before they still care about

CPI and the second thing is the labor

market so the jobs report and the jolts

reports so I'm going to keep you updated

on all of this all the consequences

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