The Federal Reserve cut interest rates by 0.25 percentage points Thursday, the second consecutive cut after a two-year rate-hike run to curb postpandemic inflation.
The Federal Open Market Committee (FOMC), the panel of Fed officials responsible for setting interest rates, dropped its baseline borrowing cost range down to a range of 4.5 to 4.75 percent.
The rate cut, which was widely expected by economists and Fed watchers, is the central bank’s second of the year. The Fed hiked rates rapidly in the face of high inflation, then left them at elevated levels to snuff out rapid price growth.
While inflation has come down drastically, the sticker shock of higher prices was ultimately too much for Americans who elected President-elect Trump two days ago to a second term, threatening to shake up an economy that has only recently righted itself.
Trump has promised to implement massive tariffs on imports to the U.S. and, if Republicans manage to take the House as they have the Senate and White House, further slash the corporate tax rate and extend 2017 tax cuts.
Economists surveyed last month by The Wall Street Journal expected higher inflation, deficits and interest rates under Trump’s proposed policies. Trump has panned those criticisms, insisting those experts are wrong and have consistently misjudged his economic agenda.
