Fed cuts rates, highlights labor market easing, solid growth

The US Federal Reserve cut interest rates by a quarter of a percentage point on Thursday, and policymakers took note of a labor market that has “generally relaxed” while inflation continues to fall toward target. of 2% set by the central bank.

“Economic activity has continued to expand at a solid pace,” the central bank’s rate-setting Federal Open Market Committee said at the end of a two-day meeting in which policymakers lowered the benchmark interest rate to one day to the range of 4.50%-4.75%, as expected.

The decision was unanimous.

However, while the Fed’s previous monetary policy statement referred to slowing monthly employment gains, the new one discussed the labor market more broadly.

Although the unemployment rate remains low, “labor market conditions have generally relaxed,” he added.

Risks to the labor market and inflation are “roughly balanced,” the Federal Reserve said, repeating language from the statement released after its September meeting.

The new statement also slightly altered the reference to inflation, saying that price pressures had “progressed” toward the Fed’s target, rather than “progressing further.”

The price index for personal consumption expenditures excluding food and energy, a key indicator of inflation, has changed little in the last three months, standing at around 2.6% annually in September.

The Federal Reserve’s statement will be interpreted in light of Republican President-elect Donald Trump’s return to power in January.

Trump, who defeated Democratic Vice President Kamala Harris In Tuesday’s election, he campaigned on promises ranging from steep import tariffs to an immigration crackdown that could have a broad and unpredictable impact on the economic landscape the Fed will navigate in the coming months.

Jerome Powell, who was appointed by Trump in his first term to lead the Fed and who later clashed with the then president over rate policy in 2018 and 2019.

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