US cuts interest rates as Trump election raises uncertainty
The US Federal Reserve has reduced its key interest rate again amid new uncertainties following Donald Trump’s presidential election victory.
The cut brings the lending rate to a range of 4.5%-4.75%, marking the second consecutive reduction after the Fed lowered rates in September for the first time in over four years. This move signals the Fed’s confidence that inflation is stabilizing.
While economists had anticipated further rate cuts in the coming months, Trump’s proposed tax cuts, immigration changes, and tariffs could put upward pressure on inflation and increase government borrowing, potentially complicating rate forecasts. US debt interest rates have already risen this week, reflecting these concerns.
The Fed’s key rate serves as a benchmark for lending across the economy, affecting interest rates on credit cards, mortgages, and other loans. After a rapid increase in rates in 2022 to counter inflation, which brought the Fed’s rate to about 5.3%, borrowing costs have been at their highest in two decades. The latest 0.25 percentage point cut, announced on Thursday, was largely anticipated by markets.
