In its first easing since the global pandemic, the US Federal Reserve has cut interest rates by half a percentage point overnight. The expectation is that there will be a steady easing of monetary policy in the year ahead. That said, the Fed Chairman Jerome Powell went to great lengths to reassure investors that the economy was in good shape and that this decision was not ‘urgent’.

Market reaction to the decision was cautious, with some profit taking on the news.

Back in Australia, our unemployment rate has remained steady at 4.2% (still very tight) taking some of the pressure off the RBA to quickly follow suit and lower interest rates. So for the time being, the RBA are likely to maintain a ‘tightening bias’ rather than consider any rate cuts for a while.

Rick Maggi, Westmount Financial