The Federal Reserve’s decision to slash interest rates by 50 basis points — its first cut in four years — has been welcomed by investors and market participants.
However, the Fed must not now lose its nerve and needs to remain aggressive.
This larger-than-expected cut is an encouraging step in the right direction. But to truly realize the long-term benefits of today’s decision, the Fed must continue to show resolve. It needs to keep up the pace with further rate cuts—with another 50 basis points in December and more into 2025.
I and other market experts caution that the Fed risks undoing today’s progress if it pauses too soon.
A failure to follow through on further cuts would likely undermine confidence and signal that the Fed lacks the commitment needed to fully stabilize the economy.
Although today’s rate cut has generated optimism, it’s viewed by many as just the first step in a broader, more prolonged journey to settle the economy.
Financial strategists warn that without additional rate reductions in the coming months, the benefits of this initial move could diminish, leaving the economy vulnerable.
The time lag between policy changes and their real-world impact is crucial. We might not see the effects of today’s decision immediately, but if the Fed hesitates next time, it risks sending mixed signals to the markets and stalling the efforts.
Investors see this decisive action as a vital measure to support business investment, consumer spending, and overall economic growth.
The rate cut is expected to relieve some pressure on businesses by reducing borrowing costs, while also stimulating consumer confidence and spending.
Yet, for this momentum to truly continue, experts agree that additional strategic rate cuts will be essential. A single rate cut will not be enough to address the deeper economic challenges.
While this action shows the Fed is willing to be bold, they must continue down this path to ensure sustained economic strength. Failing to act further would jeopardize the reaction we’ve seen today and could leave both the markets and the broader economy exposed to renewed risks.
The Federal Reserve has demonstrated today that it can act with boldness, but it cannot afford to signal weakness moving forward.
Additional cuts — another 50 basis points in December and more into 2025 — will be critical to reinforcing market confidence, driving economic growth, and ensuring the stability of both the US and global economy.
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London-born Nigel Green is founder and CEO of deVere Group. Following in his father’s footstep, he entered the financial services industry as a young adult. After working in the sector for 15 years in London, he subsequently spent several years operating within the international space, before launching deVere in 2002 with a single office in Hong Kong. Today, deVere is one of the world’s largest independent financial advisory organizations, doing business in 100 countries and with more than $12bn under advisement. It specializes global financial solutions to international, local mass affluent, and high-net-worth clients. In early 2017, it was announced that deVere would launch its own private bank. In addition, deVere also confirmed it has received its own investment banking license.