After nearly a year of waiting, the Federal Reserve has finally decided to return to a loose monetary policy approach. In Wednesday's meeting, the Fed announced a 25 basis point reduction in the benchmark interest rate, bringing the federal funds rate range down to between 4% and 4.25%, the lowest level since December 2022.

The decision to cut interest rates was not unexpected, but rather based on clear signals of a slowdown in U.S. economic growth. The Fed acknowledged in its statement that both economic growth and the job market showed signs of slowing in the first half of the year. This assessment is supported by the latest economic data, particularly the concerning employment report for August. The report indicated that the U.S. economy added only 22,000 jobs, while the unemployment rate rose to 4.3%, reaching a nearly two-year high.

It is more noteworthy that the revisions to employment data from previous months indicate that the actual number of new jobs added is far lower than previously expected. These signs collectively highlight that the US labor market is facing a clear weakening trend.

In the face of these economic indicators, the Fed's decision to cut interest rates reflects its cautious attitude towards the economic outlook. This policy adjustment is aimed not only at stimulating economic activity but also at preparing for a possible further economic downturn.

As the Fed shifts its policy stance, market expectations for more rate cuts in the future are heating up. Investors and economists will closely monitor subsequent economic data and the remarks of Fed officials to assess the future direction of monetary policy and its potential impact on various assets.