US cuts interest rates as Trump election increases uncertainty

The Federal Reserve has cut its key interest rate again as the election of Donald Trump as president brings new uncertainty about the future of borrowing costs.

The reduction puts the Federal Reserve's lending rate at 4.5% to 4.75%.

This is the second straight decline after the Fed cut interest rates in September for the first time in more than four years, suggesting there is confidence that price increases are finally stabilizing.

Forecasters expect borrowing costs to fall further in the coming months, but warned that Trump's plans for tax cuts, immigration and tariffs could keep pressure on inflation and drive up the national debt, complicating those bets.

US debt interest rates have already risen this week, reflecting these concerns.

The Fed's key interest rate – what banks charge for short-term loans – sets a benchmark for lending across the economy and influences how banks set interest rates on credit cards, mortgages and other loans.

Those borrowing costs remain at their highest level in two decades after the Fed quickly raised interest rates in response to inflation in 2022, cutting its benchmark interest rate to about 5.3%.

The cut announced Thursday, which was widely expected, cut interest rates by 0.25 percentage points.

Fed officials said there has been “progress” on inflation but that inflation remains “somewhat” above its 2% target.

Central bank policymakers said they were equally focused on keeping prices stable and the labor market healthy, repeating statements from their last meeting.

According to the latest official figures, the pace of price growth in the US was 2.4% in September, compared to more than 9% in June 2022.