US Interest Rate Cut
The US Central Bank, the Federal Reserve (Fed), decided to cut its main interest rate (the federal funds rate) by a small amount to a new range of 3.75%–4.00%. This move was largely expected by the market. The main reason for this decision is the Fed's worry about job growth; they want to make sure the economy doesn't slow down too much, even though inflation is still a little high. By cutting the rate, the Fed is making it cheaper to borrow money across the entire US economy, which should encourage companies to invest and hire more workers. This action marks the second cut in a row, clearly signaling the Fed's focus on supporting the economy.
This decision has clear impacts on the financial markets. Lower interest rates generally make a country's currency less appealing to international investors because they earn less interest. Therefore, the US Dollar (USD) is likely to weaken against other world currencies. In contrast, the news is usually good for the Stock Market. Lower borrowing costs increase company profits and make stocks look more attractive compared to fixed-income assets. This means that US stock indices (like the S&P 500) will likely see upward pressure. The key takeaway is that the cost of money is getting cheaper, which boosts stocks and typically weakens the dollar.