Citing lower risk of inflation and hoping to “help forestall some of the adverse effects on the broader economy that might otherwise arise from the disruptions in financial markets and to promote moderate growth over time,” according to its statement, the Federal Open Market Committee on September 18 cut its target rate for Fed Funds by 50 bps, to 4.75%. It is possible that lower Producer Price Index (PPI) numbers, down 1.4% for August, may have been factored into the Fed’s decision to cut by 50 bps rather than 25 bps.
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