Federal Reserve Cuts Interest Rates by 25 Basis Points
Ongoing Inflation Progress and Labor Market Slowdown Drive Fed’s Decision
The Federal Reserve cut its benchmark interest rate by 25 basis points to a range of 4.50%-4.75% on Thursday. This adjustment, following September’s larger 50-basis-point cut, reflects ongoing improvements in inflation control and indications of a softening labor market.
According to Fed Chairman Jerome Powell, “The labor market is not a significant source of inflationary pressures,” citing indicators suggesting the labor market is less tight than it was before the pandemic. The latest measure of the Fed’s preferred inflation gauge, the core Personal Consumption Expenditures (PCE) index, remained steady at 2.7% in September, slightly above economist expectations of 2.6%.
Impact of Political Shift: Potential Policy Adjustments Under New Leadership
This rate cut arrives amid political changes, with President-elect Donald Trump’s victory signaling potential economic policy shifts. Powell noted that while immediate policy changes aren’t anticipated, potential measures from the new administration—like tariffs, tax adjustments, and immigration policy revisions—could impact inflation and the Fed’s rate-cut timeline.
Market expectations suggest the Fed will conclude its rate-cutting cycle after two more 25-basis-point reductions in 2025, bringing rates to the 3.75%-4% range.


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