The US Federal Reserve cut its key interest rate by 0.25% on Thursday, continuing its efforts to support the job market and reduce inflation, which has now fallen closer to the Fed’s 2% target, AP News reports.
This move follows a larger half-point cut in September and comes amid the economic uncertainty of Donald Trump’s recent election victory. Fed Chair Jerome Powell dismissed concerns about the potential impact of Trump’s election on the Fed’s policies and reaffirmed the central bank’s independence, stating that he would not resign if Trump requested it.
The rate cut reduces the benchmark rate to 4.6%, down from a 5.3% peak aimed at controlling inflation, which has dropped from 9.1% in mid-2022 to 2.4% in September. The Fed had previously projected further rate cuts, but the stronger-than-expected economy and anticipation of Trump’s economic policies, such as tariffs and higher taxes, may reduce the likelihood of additional rate reductions.
The economy grew solidly in recent months, and consumer spending remained strong, though hiring has slowed. Powell expressed confidence that inflation will continue to decline, but acknowledged it will take time for Americans to feel the benefits of reduced inflation and wage growth.
