The U.S. central bank has cut its key interest rate again as the election of Donald Trump as president casts new uncertainty on the future of borrowing costs.
The cut puts the Federal Reserve’s lending rate at 4.5%-4.75%.
It marks the second straight decline after the Fed cut rates for the first time in more than four years in September, reflecting confidence that rising rates are finally stabilizing.
Forecasters expected borrowing costs to fall sharply in the coming months but warned that Trump’s plans for tax cuts, immigration and tariffs could keep inflationary pressures high and increase government borrowing, making those bets difficult.
Interest rates on US debt have already jumped this week, reflecting that concern.
The Fed’s key rate – what it charges banks for short-term lending – sets a benchmark for lending throughout the economy, influencing how banks set interest rates on credit cards, mortgages and other loans.
Those borrowing costs have been rising at their highest rates in two decades, after the Fed raised rates quickly in response to inflation in 2022, bringing its key rate to around 5.3%.
The cuts announced on Thursday, which were widely expected, lowered prices by 0.25 percent.
Fed officials said there had been “progress” on inflation, but that it remained “some way” above its 2% target.
Central bank policymakers said they were equally focused on keeping prices stable and the labor market healthy, echoing language used at their last meeting.
The pace of inflation in the US stood at 2.4% in September, down from more than 9% in June 2022, according to the latest official figures.
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