The Federal Open Market Committee (FOMC) of the US Federal Reserve (Fed) cut interest rates by 25 basis points to a target range of 4.50%-4.75%. The Fed's latest rate cut comes on the heels of its last rate cut in September.
The Fed’s latest rate cut was widely anticipated, with signals of a cut coming from the Fed’s September meeting and subsequent statements from policymakers.
The Fed's decision to cut interest rates comes amid a changing political landscape in the US. Donald Trump won the US election on November 5.
Economists largely expect the president-elect’s policies to pose challenges for inflation, as he seeks to impose punitive tariffs and deport undocumented immigrants en masse. Inflation has remained low during Trump’s first term while economic growth, outside the early stages of the COVID-19 pandemic, has remained strong.
However, Mr. Trump has been harshly critical of Fed Chairman Jeremy Powell and his colleagues during his first term as US president. Mr. Powell's term as Fed chairman will end in early 2026.
NBC News notes that central bankers have consistently avoided commenting on political issues, but the president-elect’s moves could have implications for the Fed’s upcoming policy course. An acceleration in economic activity under Trump could convince the Fed to cut rates less frequently, depending on how inflation plays out.
Mr. Powell said that the new administration will not directly affect monetary policy. "In the near term, the election will not affect our policy decisions," Mr. Powell said.
Fed Chairman Powell also said he would not resign even if the president-elect asked him to. He ended the Fed's press conference earlier than usual after being bombarded with questions about the new administration.
