The U.S. Federal Reserve cut interest rates on Thursday (Friday AEDT), lowering the federal funds rate by a quarter-percentage point to between 4.50% and 4.75%.
The second consecutive rate cut was widely anticipated by the market, amid a cooling labour market and the Central Bank’s steady progress on taming inflation.
The Federal Open Market Committee unanimously voted to lower rates by 25 basis points following the massive 50 basis-point cut in September – the first such move in more than four years.
However, since Donald Trump claimed victory in the presidential election, the future direction of the U.S. economy has come into question.
Many economists are suggesting Trump’s proposals are highly inflationary for the economy, including boosting tax cuts, tariffs and adding to the federal debt.
Fed Chair Jerome Powell said in a post-meeting press conference on Thursday: “In the near term, the election will have no effects on our policy decisions.”
“The economy is strong overall and has made significant progress toward our goals over the past two years,” Powell told reporters. “We continue to be confident that with an appropriate recalibration of our policy stance, strength in the economy and the labour market can be maintained with inflation moving sustainably down to 2%.”
Meanwhile, Powell said he would refuse to resign if President-elect Donald Trump asks him to step down. When questioned twice by a reporter if he would leave his role if the new administration requested him to, Powell simply responded “no”.
Donald Trump is most likely to allow Powell to remain at the helm until the Chair's term expires in May 2026, CNN reported on Thursday citing a senior adviser to Trump.
