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The Federal Reserve’s recent interest rate cut of 0.25% in October 2025 has reignited discussions on the relationship between monetary policy and stock market performance. Investors, analysts, and economists are closely evaluating how the Fed’s interest rate decisions will shape U.S. economic growth, inflation trends, and global financial markets heading into 2026.
Bank stocks experienced a sharp decline on October 16, 2025, as growing jitters over credit quality and mounting risks in US regional lenders sent shockwaves through financial markets.
easing in six months and signaling readiness to act further if risks to the economy persist or increase.
The Federal Reserve System is the central banking system of the United States. The Federal Reserve System is composed of several layers. It is governed by the presidentially-appointed board of governance or Federal Reserve Board. In response to the financial panic of 1907 The Fed was established by the President Woodrow Wilson on 23 Dec. 1913.
Before that the U.S. was the only major financial power without a central bank. Its creation was precipitated by repeated financial panics that afflicted the U.S. economy over the previous century, leading to severe economic disruptions due to bank failures and business bankruptcies. A crisis in 1907 led to calls for an institution that would prevent panics and disruptions.