The US central bank cut its key interest rate

This is down 50 basis points or 0.5 percentage points from the previous range of 5.25-5.50 percent.

The decision to cut rates came as no surprise to markets and analysts, but the step was bigger than most had expected.

After a two-day meeting, the UFR announced on its website that the latest macroeconomic data show that "economic activity continues to expand at a significant pace." Job growth has slowed and the unemployment rate has risen but remains low. Inflation made further progress towards the 2 percent target, but remains somewhat elevated.

The IMF has gained "greater confidence that inflation is moving sustainably towards 2 percent and assesses that the risks to achieving the employment and inflation targets are roughly balanced".

The monetary institution adds that due to the presence of risks "in considering further adjustments to the target range of the key interest rate" incoming data and changing perspectives will be closely monitored.

The decision was taken by a majority of 11 votes against 1.

In addition, the UFR indicated that it is possible to lower its interest rates again by the end of the year.

This is the first rate cut in the US since March 2020, when the COVID-19 pandemic was announced. Interest rates were then lowered to near zero to support the economy. CBS described the move as an aggressive start to a campaign to ease monetary policy.

However, low interest rates and problems related to supply chains after the end of the acute phase of the pandemic led to a rise in inflation, which prompted the IMF to start tightening its monetary policy.

The rate hike began in March 2022 amid inflation that hit its highest level since the 1980s in June of that year.

The tightening of monetary policy peaked in July 2023, when the Fed last raised interest rates to a 22-year high of 5.25-5.50 percent.