Making sense of the markets this week: September 22, 2024 + MORE Sep 20th

Posthaste: Bank of Canada can go bigger on rate cuts as Fed ‘blows the door wide open’  Financial Post‘Exceptional’ mortgage rates spotted in Canada after U.S. Fed rate cut  Global NewsJM Financial explains how US Fed’s 50 bps rate cut will impact the IT sector  MintBusiness  The EconomistU.S. Federal Reserve cuts interest rates by half a percentage point  CBC.ca

Kyle Prevost, creator of 4 Steps to a Worry-Free Retirement, Canada’s DIY retirement planning course, shares financial headlines and offers context for Canadian investors.

U.S. Fed cuts rates for the first time in four years

The U.S. dollar remains the most important currency in the world, and the American economy is arguably the most important financial system as well. Consequently, when the U.S. Federal Reserve makes a big announcement, it creates an economic wave that ripples everywhere. That’s why Wednesday’s decision to cut the key overnight borrowing rate by 0.50% is a very big deal.

Many speculated the U.S. Fed would begin cutting rates this week, but it was generally thought it would go with a 0.25% drop to begin an interest rate-cut cycle. The 50 basis points cut lowers the federal funds rate range 4.75% to 5%.

Source: CNBC

The U.S. Fed announced in a statement: “The Committee has gained greater confidence that inflation is moving sustainably toward 2%, and judges that the risks to achieving its employment and inflation goals are roughly in balance…