Federal Reserve Cuts Rates
Federal Reserve Cuts Rates by a quter point in first announment following election.
The Federal Reserve cut interest rates by a quarter point on Thursday, following the U.S. presidential election earlier this week. This reduction, from 4.75 percent to 4.5 percent, marks the first announcement following Tuesday's election and the re-election of Donald Trump.
It’s the second rate cut since the central bank began lowering borrowing costs in September, though this latest cut is smaller. Still, it provides Americans with further relief from the high cost of loans like credit cards, auto loans, and mortgages.
In a statement from the Federal Open Market Committee (FOMC), it was noted that "Recent indicators suggest that economic activity has continued to expand at a solid pace. Since earlier in the year, labor market conditions have generally eased, and the unemployment rate has moved up but remains low. Inflation has made progress toward the Committee's 2 percent objective but remains somewhat elevated."
The Federal Reserve is closely monitoring both inflation and the job market, with officials noting that the risks of a weakening job market and rising inflation are now balanced. However, the focus has recently shifted toward the labor market, which, although still relatively healthy, has shown signs of slowing. In September, job openings dropped to 7.4 million from 9.3 million a year prior, and the hiring rate decreased to 3.5% from 3.7%. The unemployment rate rose to 4.1% in October, up from 3.8% a year ago, and continued claims for unemployment benefits reached their highest level since November 2021, suggesting it is now more challenging for job seekers to secure employment.