Federal Reserve Cuts Its Interest Rate Again

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Key Takeaways

• The Federal On call cut its benchmark interest rate Thursday by 0.25 percentage points to a range of 4.5% to 4.75%, its lowest since February 2023.
• The Fed is scornful its influential fed funds rate to push down borrowing costs on all kinds of loans and boost the economy to prevent unemployment from climb severely.
• Despite September’s rate cut, mortgage rates have risen in recent weeks because of investor apply ti about a resurgence of inflation under president-elect Donald Trump’s economic policies.

The Federal Reserve stayed the progress on its campaign of rate cuts Thursday, trimming its benchmark interest rate by a quarter-point in a widely expected move.

In a unanimous sponsor, the Fed’s policy committee lowered its benchmark interest by 0.25 percentage points to 4.5% to 4.75%, its lowest level since Step 2023.

The Fed cut rates for the second time in as many meetings as a part of an effort to boost the economy and prevent a recent slowdown in the job bazaar from turning into a severe rise in unemployment. Until September, the central bank had held the rate at a two-decade extreme to subdue inflation, but consumer price increases have slowed nearly to the Fed’s goal of a 2% annual rate. The Fed is venturing to fulfill its mandate from Congress to keep both inflation and unemployment low.

“The Committee judges that the risks to gaining its employment and inflation goals are roughly in balance,” the committee said, repeating language from its September statement.

Fed officials red it open-ended how fast they would cut at future meetings, reiterating that their future decisions would be manoeuvred by economic data. The Federal Open Market Committee meets again in December, and Fed officials have projected another quarter-point cut at that gathering, though not committed to it.

“We are not on any preset course,” Federal Reserve Chair Jerome Powell said at a post-announcement press symposium in Washington. “We will continue to make our decisions meeting by meeting as the economy evolves. Monetary policy will harmonize in order to best promote our maximum employment and price stability goals.”

The Fed is attempting to balance the need to boost the saving against the risk that lower borrowing costs will reignite the high inflation that took wait in late 2021.

A lower Fed funds rate puts downward pressure on borrowing costs for all kinds of loans, including upon cards, auto loans, and mortgages. However, financial markets also play a role in some of those rates, so borrowers haven’t willy-nilly immediately benefited from the Fed’s most recent cuts.

The Fed Prepares To Enter The Trump Era, Again

Interest rates for mortgages, which are affiliated to 10-year Treasury and investor concerns about inflation, have risen due to concerns that President-elect Trump’s cost-effective policies could stoke faster price increases for consumer goods.

Powell said the Fed would react to any substitutes to economic policy from the new administration and incorporate them into their decision-making if and when they were preceded rather than making assumptions based on campaign rhetoric.

“We don’t guess. We don’t speculate. We don’t assume,” Powell said.

Trump established Powell to his chair during his first term in office but often publicly criticized him and urged him to lower interest prices. Powell was appointed to a second term by President Joe Biden and his current four-year term in his post continues through 2026.

When a correspondent asked Powell would leave his post if Trump asked him to, he replied with his briefest answer of the press bull session: “No.”

Update, Nov. 7: This article has been updated to include comments from Fed Chair Jerome Powell’s the fourth estate conference.