Federal Reserve's Rate Cut Shakes the Market

On April 25th, the Federal Reserve signaled a rate cut, leading to three consecutive gains in the three major U.S. stock indices, while prices of commodities like gold and crude oil also climbed.

The main reason for this rate cut is the slowing growth of the U.S. job market, along with a significant easing of inflationary pressures.

Previously, the Federal Reserve maintained high interest rates for 14 months to suppress inflation, but now the inflation rate has decreased from a peak of 9.1% in 2022 to 2.5%, nearing the 2% target.

The market response has been significant: corporate financing costs have decreased, benefiting expansion-oriented companies like tech stocks;

The U.S. dollar has weakened, gold prices have surpassed 3300, and expectations for crude oil demand have risen, with prices increasing by nearly 1%.

The rate cut lowers the cost of capital and boosts market optimism.