On the 18th local time, the Federal Reserve announced a 50 basis point reduction in its benchmark interest rate target range to 4.75% -5%, marking the first rate cut since March 2020. During these four years, the Federal Reserve raised interest rates a total of 11 times, with the benchmark rate continuously increasing from 0% -0.25% to 5.25% -5.5%.
In history, almost every cycle of interest rate cuts has been accompanied by a recession in the US economy# Almost every cycle of interest rate cuts brings about a recession in the US economy
In this chart of the Effective Federal Funds Rate in the United States, the red shaded area represents the period when the National Bureau of Economic Research has determined that the United States is in an economic recession.
It can be seen that from the oil crisis in the 1970s, the savings and loan crisis in the 1980s, the Internet foam at the turn of the century, to the global financial crisis in 2008 and the global COVID-19 in 2019, every significant interest rate cut by the Federal Reserve coincides with the shadow of the recession.
That's why interest rate cuts are sometimes seen as a "signal of economic weakness" - the Federal Reserve typically only takes action when the economy is in trouble, attempting to stimulate economic recovery through looser monetary policy.