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WASHINGTON (Reuters) -The U.S. central bank lowered interest rates on Wednesday, but Federal Reserve Chair Jerome Powell said more reductions in borrowing costs hinge on further progress in lowering stubbornly high inflation, remarks that showed policymakers are beginning to reckon with the prospects for sweeping economic change under an incoming Trump administration. Powell's explicit - and repeated - references to the need for caution from here jolted Wall Street, sending stocks sharply lower and spurring a dialing back of market estimates of how far borrowing costs are likely to fall over the coming year. "I think we're in a good place, but I think from here it's a new phase and we're going to be cautious about further cuts," Powell said at a press conference following the end of the Fed's latest two-day policy meeting.

John Petrides, Portfolio Manager at Tocqueville Asset Management, spoke with Quartz for the latest installment of our “Smart Investing” video series.

Central bank lowers benchmark federal funds rate by a quarter of a percentage point to between 4.25% to 4.5%

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The U.S. dollar advanced against its peers on Wednesday, hitting its highest level in two years, after the Federal Reserve delivered a widely expected interest rate cut while also indicating it would slow the pace of its monetary policy easing cycle. The Fed lowered its benchmark policy rate by 25 basis points to the 4.25% to 4.50% range, with officials signaling they would likely pause future rate cuts next year given a stable labor market and inflation. The yield on benchmark U.S. 10-year notes rose 6.1 basis points to 4.446%, hitting a four-week high.

Nvidia stock rose as Wall Street analysts reiterated their Buy ratings despite concerns about rising competition and the possibility that AI chip demand could wane.

Prime brokerage desks are preparing for credit shocks as leveraged trading expands within cryptocurrency financial networks.

HOUSTON (Reuters) -Oil prices settled higher on Wednesday after U.S. crude inventories fell and the U.S. Federal Reserve cut interest rates as expected, but gains were capped as the Fed signalled it would slow the pace of cuts. U.S. crude stocks and distillate inventories fell while gasoline inventories rose in the week ending Dec. 13, the Energy Information Administration said on Wednesday. "The market seems to have turned a corner from all the negativity we saw a couple weeks ago as there is more optimism about demand," said Phil Flynn, a senior analyst for Price Futures Group.

Rate-sensitive stocks plummeted on Wednesday after the Federal Reserve scaled back its forecast for future interest rate cuts and projected inflation would run hotter than previously expected next year.

In a year marked by three consecutive rate cuts totaling 100 basis points, Federal Reserve Chair Jerome Powell said the Fed is shifting gears to a more cautious stance heading into 2025 as interest rates move tantalizingly close to a neutral environment for the economy. Following the latest 25-basis-point reduction announced Wednesday, the federal funds rate now sits at 4.25%-4.5%, the lowest since January 2023. “We’re significantly closer to neutral,” Powell said during the post-meeting press c