The Federal Reserve has lowered interest rates by 0.25% as they noticed the job market has become easier while inflation is moving closer to their 2% goal.
After a two-day meeting, the Fed announced the new interest rate will be between 4.50% and 4.75%, a decision that all officials agreed on. Previous statements mentioned a drop in monthly job growth, but the latest one talks more generally about the labor market conditions.
Even though the unemployment rate is low, the Fed pointed out that job market conditions have improved overall. They believe the risks to jobs and inflation are balanced, similar to what they said last month.
The Fed also slightly changed their wording about inflation, saying it has made some progress towards their goal rather than saying it has made further progress. Recently, a key inflation measure has been steady at about 2.6% annually.
The Fed’s statement comes as Donald Trump, a Republican, prepares to take office again in January, raising uncertainty about economic policies. Trump, who previously clashed with current Fed Chair Jerome Powell over interest rates, has promised various changes that could affect the economy.
Powell will hold a press conference later to discuss the policy decision and the economic outlook. Following Trump’s election win, investors have adjusted their expectations about how much the Fed can lower interest rates in the future.
