The U.S. central bank cut interest rates again as Donald Trump’s election as president raised new uncertainty about the future of borrowing costs.
With this cut, the Fed’s lending interest rate will fall into the range of 4.5-4.75%.
It was the second straight decline since the Federal Reserve cut interest rates for the first time in more than four years in September, signaling confidence that price rises are finally stabilizing.
Forecasters had expected borrowing costs to fall further in the coming months, but warned that Trump’s plans for tax cuts, immigration and tariffs could complicate bets by putting pressure on inflation and increasing government borrowing.
Reflecting these concerns, US debt yields have already surged this week.
The Federal Reserve’s benchmark interest rate (the interest rate it charges banks for short-term loans) sets the standard for lending throughout the economy and affects how banks set interest rates on credit cards, mortgages and other loans.
Those borrowing costs are hovering around the highest in two decades after the Federal Reserve began sharply raising interest rates in 2022 in response to inflation, raising its benchmark interest rate to about 5.3%.
The widely expected cut announced Thursday cut interest rates by 0.25 percentage points.
Fed officials said there has been “progress” on inflation but that it remains “somewhat” higher than its 2% target.
Central bank policymakers said they were equally focused on keeping prices stable and the jobs market healthy, echoing language used at their last meeting.
The latest official figures show the pace of price growth in the country slowed to 2.4% in September from more than 9% in June 2022.
