Fed Quells Market Angst With $40 Billion Monthly Bill Purchases

The Federal Reserve has announced a cut in its federal funds rate, which may lead to lower mortgage rates for home buyers, sellers, and builders. This decision is seen as a potential boost for the housing market, although the exact impact will not be clear until late January.

Copper prices surged to a record high following the Federal Reserve's anticipated interest rate cut and an upgraded growth forecast for the US economy. This increase reflects heightened investor confidence in the metal's demand amid tightening supply dynamics.

Federal Reserve Chair Jerome Powell indicated that Fed staffers believe federal job creation data may be overstating actual job growth by as much as 60,000 jobs per month, suggesting a potential contraction in the job market. This revelation raises concerns about the accuracy of economic indicators that inform policy decisions.

The Federal Reserve's recent meeting yielded a less-hawkish outcome than anticipated, providing relief to Asia's markets across various asset classes, according to analysts. This development is expected to positively influence investor sentiment and market stability in the region.

The Federal Reserve announced it will begin technical purchases of Treasury bills to manage market liquidity, a move aimed at alleviating short-term funding costs and bolstering reserves within the financial system. This decision comes amid ongoing market volatility and economic uncertainty.

Asian equities experienced gains following a positive sentiment on Wall Street, driven by the Federal Reserve's recent interest rate cut and optimistic remarks from Chair Jerome Powell regarding the US economy's potential recovery as inflationary pressures from tariffs diminish.

Top economist Diane Swonk has warned that Federal Reserve Chair Jerome Powell risks undermining the Fed's credibility by making decisions influenced by artificial intelligence and immigration factors, particularly in light of the current labor market's challenges. Swonk's analysis highlights the precarious state of the economy as it transitions into 2025, characterized by a 'low-hire, low-fire' environment.

The Federal Reserve has cut interest rates to a three-year low following a contentious meeting, marking the most significant dissent among its top officials since 2019, with three members opposing the decision. This move is seen as a response to ongoing economic challenges and inflation concerns.