The Fed cuts rates, notes labor market easing and solid economic growth

Washington: The Federal Reserve cut interest rates by a quarter of a percentage point on Thursday as policymakers noted a job market that has “generally eased” while inflation is moving toward the US central bank’s 2% target.

“Economic activity is expanding at a robust pace,” the central bank’s rate-setting Federal Open Market Committee said at the end of a two-day policy meeting, in which officials cut the benchmark overnight interest rate to a range of 4.50%-4.75%, in line with broad expectations. The decision was taken unanimously.

But where the Fed’s previous policy statement noted a decline in monthly job gains, the new one referred more broadly to the labor market.

Although 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 a statement released after its September meeting.

The new statement also made slight changes to the inflation context, saying that price pressures have “made progress” toward the Fed’s objective, rather than earlier language that had “made more progress.” The main measure of inflation, the price index for personal consumption expenditures excluding food and energy items, was little changed over the past three months, running at an annualized rate of about 2.6% through September.

The Fed’s statement will be interpreted in light of Republican President-elect Donald Trump’s return to power in January.

Trump, who defeated Democratic Vice President Kamala Harris in Tuesday’s presidential election, campaigned on promises ranging from massive tariffs on imports to a crackdown on immigration that could have wide-ranging and unpredictable effects on the economic landscape that the Fed will navigate in the coming months as officials try to To keep inflation under control and close to the central bank’s target.

Fed Chairman Jerome Powell, who was appointed by Trump to lead the Fed in his first term and then clashed with the then president’s over rate policy in 2018 and 2019, will hold a press conference at 2:30 pm EST (1930 GMT). Elaborate on policy statement and economic outlook.

Investors have already trimmed their own bets that the central bank will be able to cut interest rates as expected following Trump’s election victory.