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Hong Kong, China — Tokyo’s Nikkei led Asian markets higher Thursday as the yen hit a two-week high after the Federal Reserve announced a bumper interest rate cut and pledged a series of further reductions that boosted sentiment.
After a keenly awaited meeting the US central bank decided to lower borrowing costs for the first time since the start of the pandemic by opting for a half-point reduction.
However, the bigger of two options — some had expected a 25-basis-point cut — split opinion, with some warning it could reignite inflation while others said it showed the bank was keeping ahead of the curve in supporting the economy in light of weak jobs data.
The bank’s “dot plot” guidance indicated another 50 points of reductions before January, followed by 100 next year and 50 in 2026.
After the meeting, Fed boss Jerome Powell said the economy was in “good shape” pointing to lower inflation and solid growth.
“The labour market is in a strong place. We want to keep it there,” he told reporters.
But he cautioned that the central bank would “go carefully” and weigh the matter “meeting by meeting” as it looks to keep easing.
“It is time to recalibrate our policy to something that is more appropriate, given the progress on inflation, and on employment moving to a more sustainable level.
“This is the beginning of that process.
