On Wednesday, December 18, the Federal Reserve Bank cut its primary interest rate a quarter of a point. The benchmark lending rate range is now at 4.25% to 4.50%, a two-year low. This was the third rate reduction this year.That's good news. The bad news, as the markets saw it, was that the Federal Reserve Bank reduced the number of anticipated rate cuts in 2025 from 4 to 2. That sent the stock markets scrambling. The Dow Industrial Average dropped 1,100 (2%). The broader market indices, S&P 500 and NASDAQ, also fell 1.9% and 2.5%, respectively. The Federal Reserve Bank remains vigilant in keeping inflation at bay. Some investor believe President -elect Trump's threat of massive tariffs on goods coming from Mexico, Canada, and China could stoke inflation. CNN has a good summary of the Fed announcement.
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