David McNamara: Fed pivots from inflation to growth concerns

The key takeaway from the bumper interest rate cut last week is that the Fed has decisively shifted its focus away from its inflation mandate towards the labour market and GDP growth 

Federal Reserve chair Jerome Powell.

The move by the US Federal Reserve to initiate its rate-cutting cycle with a bumper 50 basis point (bps) cut to a range of 4.75%-5.00% came as somewhat of a surprise, with investor focus now turning to how the Fed will proceed from here, and what impact the move will have on other major central banks. 

The Fed cut marked the first rate change in nine meetings and began the cycle of reducing the restrictiveness of monetary policy on a US economy that is showing signs of softening. However, the decision by the Fed to cut rates by 50bps was not unanimous, with one of the voting members preferring a 25bps reduction.