The US central bank has cut its key interest rate again as Donald Trump’s election as president raises new uncertainty about the future for borrowing costs.
The cut puts the Federal Reserve’s lending rate in the range of 4.5%-4.75%.
It marks the second drop in a row after the Fed lowered rates for the first time in more than four years in September, indicating confidence that price rises were finally stabilising.
Forecasters have been expecting borrowing costs to fall further in the months ahead but warned that Trump’s plans for tax cuts, immigration and tariffs could keep pressure on inflation and drive up government borrowing, complicating those bets.
Interest rates on US debt have already jumped this week, reflecting those concerns.
The Fed’s key rate – what it charges banks for short-term borrowing – sets a benchmark for lending across the economy, influencing how banks set interest rates for credit cards, mortgages and other loans.
Those borrowing costs have been hovering at the highest rates in two decades, after the Fed rapidly hiked rates in response to inflation in 2022, bringing its key rate to roughly 5.3%.
The cut announced on Thursday, which was widely expected, lowered rates by 0.25 percentage points.
Fed officials said there had been “progress” on inflation, but that it remained “somewhat” above its 2% target.
Central bank policymakers said they were equally focused on keeping prices stable and the job market healthy, echoing language used in their last meeting.
The pace of price rises in the US stood at 2.4% in September, down from more than 9% in June 2022, according to the latest official figures.
This article was originally published at www.bbc.com
