By how many basis points did the Fed cut interest rates in 2024?

To understand why a cut of 100 basis points (bps) is the correct answer, it is important to recognize that when central banks like the Federal Reserve take action on interest rates, their decisions impact economic activity significantly. A reduction of 100 bps indicates a more aggressive move towards stimulating the economy, typically in response to slowing growth or inflationary pressures that may necessitate a more substantial softening in monetary policy.

In the context of 2024, if the economy faced challenges such as downturns caused by external market conditions or internal structural issues, a cut of 100 bps would reflect a significant attempt by the Fed to provide liquidity and lower borrowing costs for consumers and businesses. This substantial reduction could aim to rejuvenate spending and investment during periods of economic retrenchment.

It's also worth noting that adjustments in interest rates are often done in increments of 25 bps, meaning that cuts of 50 bps or even larger (like 100 bps) would be responses to more pressing economic concerns. A decision to implement a cut of this magnitude is typically based on thorough economic analysis and projections about future economic performance.

In assessing the potential reasons for other options, a cut of 50 bps may not reflect the urgency of