The Federal Reserve cut its key interest rate Thursday by a quarter-point in response to the steady decline in inflation that had angered Americans and helped drive Donald Trump's presidential election victory. This rate cut reflects the Fed's renewed focus on supporting the job market as well as combating inflation, which now barely exceeds the central bank's 2% target.
Chair Jerome Powell stated, "in the near term, the election will have no effects on our (interest rate) decisions." This statement underscores the Fed's commitment to maintain independence from political influence, especially considering the potential impact of Trump's presidency on economic policy.
When asked whether he would resign if Trump requested it, Powell firmly responded, "No." He emphasized that under the law, Trump could not fire or demote him, further asserting the Fed's autonomy.
The rate cut reduces the Fed's benchmark rate to about 4.6%, down from a four-decade high of 5.3% before September's meeting, highlighting the Fed’s substantial actions to manage a drastic inflation spike from a peak of 9.1%.
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