The Federal Reserve has approved its second consecutive rate cut, lowering its benchmark rate by a quarter-point to a target range of 4.50%-4.75%. This unanimous decision by the Federal Open Market Committee (FOMC) reflects a shift toward supporting both employment and inflation control.
Following September’s larger half-point cut, the Fed’s latest move signals a more cautious approach as it recalibrates monetary policy. The benchmark rate, which affects consumer loans like mortgages and credit cards, was widely expected by markets, boosting stocks, with the Nasdaq up 1.5% and the S&P 500 reaching record highs.
Fed Chair Jerome Powell described this “recalibration” as essential to stabilizing inflation around 2% while maintaining job growth. Although recent economic data shows mixed signals—with moderate GDP growth at 2.8% and softer job gains in October—the Fed aims to prevent an overheated job market.
The decision also comes as President-elect Donald Trump prepares to take office. Powell affirmed that Fed policy remains independent of political shifts, even as Trump’s proposed economic policies could impact inflation. The Fed’s future path may include another quarter-point cut in December, as the central bank seeks a “soft landing”—curbing inflation without triggering a recession.
Fed Chair Jerome Powell
While the Fed’s inflation gauge is at 2.1%, consumer borrowing costs, including mortgage rates, have risen. Balancing inflation control with economic momentum remains the Fed’s primary focus in the months ahead.
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