The Fed cuts rates, taking note of labor market ease and solid economic growth

WASHINGTON – The Federal Reserve cut interest rates by a quarter of a percentage point on Thursday as policymakers noted a “generally easing” job market and inflation heading toward the US central bank's 2% target.

“Economic activity is expanding at a strong 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 to 4.50%-4.75% overnight. range, as widely expected. The decision was unanimous.

But where the Fed's previous policy statements pointed to a slowdown in monthly job gains, the new one cited the labor market more broadly.

Despite the low unemployment rate, “labour market conditions have generally eased,” the statement said.

Job market risks and inflation are “roughly in balance,” the Fed said, reiterating from a statement issued after its September meeting.

The new statement also slightly changed the context of inflation, saying that price pressures have “made progress” toward the Fed's goal instead of the earlier language that “has made further progress.” The main measure of inflation, the personal consumption expenditure price index excluding food and energy items, was little changed over the past three months, running at an annual rate of about 2.6% through September.

The Fed 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 steep tariffs on imports to a crackdown on immigration that could have wide-ranging and unpredictable effects on the economic landscape that Fed officials try to navigate in the coming months. to keep inflation under control and close to the central bank's target.

Fed Chair Jerome Powell, who was appointed by Trump to lead the Fed in his first term and then clashed with the then-president's rate policy in 2018 and 2019, will hold a press conference at 4:30 pm MT to detail the policy. Legislative and Economic Perspectives.

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