Fed Navigates Economic Shifts with Rate Cut and Powell’s Commitment to Stay
Washington, D.C. – The United States Federal Reserve has cut interest rates by a quarter of a percentage point, acknowledging signs of a cooling job market even as inflation approaches the central bank’s 2 percent target. This move places the Fed’s benchmark interest rate between 4.5 and 4.75 percent, with the decision made unanimously by the Federal Open Market Committee following a two-day policy meeting.
Fed Signals Caution on Future Cuts
The Fed’s latest policy statement highlighted an easing in labor market conditions, noting that while the unemployment rate remains low, job gains have slowed. The central bank expressed confidence in the balance of risks to both inflation and employment, signaling a careful approach to any further rate adjustments. Federal Reserve Chair Jerome Powell emphasized the Fed’s strategy, explaining, “We think that the economy, and we think our policies, are both in a very good place, a very good place.”
Powell remained cautious on future rate cuts, emphasizing that the Fed will adjust policy based on incoming data to move gradually toward a “neutral” interest rate level.
Powell Resolute Amid Trump’s Re-Election
The Fed’s outlook is further complicated by President-elect Donald Trump’s return to the White House. Trump, who defeated Vice President Kamala Harris, has proposed policies ranging from tariffs to immigration reform that could significantly impact the Fed’s economic landscape. Powell, appointed by Trump in his first term but often criticized by him, was clear in his response to speculation about his role under the new administration.
Asked if he would resign if requested by Trump, Powell firmly replied, “no,” and pointed out that his term extends until January 2028, with legal protections against early dismissal.
Markets Brace for Economic Shifts
Following Trump’s election victory, investors are reconsidering their expectations for future Fed rate cuts. Powell’s reassurances underscore the Fed’s cautious approach to navigating the economic landscape amid policy uncertainty and shifting market expectations.