The Federal Reserve cut interest rates by a quarter of a percentage point on Thursday as policymakers took note of a job market that has “generally eased” while inflation continues to move towards the US central bank’s 2% target.
“Economic activity has continued to expand at a solid pace,” the central bank’s rate-setting Federal Open Market Committee said at the end of a two-day policy meeting in which officials lowered the benchmark overnight interest rate to the 4.5%-4.75% range, as widely expected. The decision was unanimous.
But where the Jerome Powell-led Fed’s previous policy statement noted slowing monthly job gains, the new one referred to the labour market more broadly. Even while the unemployment rate remains low, “labour market conditions have generally eased,” the statement said. Risks to the job market and inflation were “roughly in balance,” the Fed said, repeating language from the statement released after its Sept meeting. The new statement also slightly altered the reference to inflation, saying that price pressures had “made progress” towards the Fed’s objective, rather than the prior language that it had “made further progress”.
The Fed statement will be interpreted in light of Republican President-elect Donald Trump’s return to power in Jan. Trump, who defeated Kamala Harris, campaigned on promises ranging from steep tariffs on imports to a crackdown on immigration that could have a broad and unpredictable impact on the economic landscape the Fed will navigate in coming months as officials try to keep inflation contained and close to the central bank’s target.
