Investors relieved by 'aggressive' Fed rate cut but question need of large snip

First rate reduction in four years

Investors breathed a sigh of relief after the Federal Reserve slashed interest rates by 50 basis points, bringing the overnight lending rate down to a range of 4.75% to 5%.

In a speech, Fed chair Jerome Powell said the move is a sign of the US central bank's growing confidence in a soft landing for the US economy, as labour markets continue to cool and inflation moves towards its 2% target. Joost van Leenders, senior investment strategist at Van Lanschot Kempen, argued that an "aggressive" snip generally takes place in times of heightened market distress, such as the popping of the dot.com bubble in 2001 or the financial crisis in 2007. While he agreed that US economy "seems on the way to a soft landing", van Leenders said that this big opening move "com...