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The US Federal Reserve has cut interest rates by 0.25 percentage points again amid the presidential election victory of Republican Donald Trump which has brought clouds of uncertainty about the future for borrowing costs.
The policymakers on Thursday noted that inflation continues an upward trajectory while there’s a job market which has generally eased. The cut by the Federal Reserve has put the lending rates at 4.5%-4.75%.
The Federal Reserve lowered the interest rates in September for the first time in four years, and has now continued the trend indicating confidence that price rises were finally stabilising.
Economic pundits expect the interest rates to plunge further in the months ahead by the Federal Reserve but the victory of Donald Trump in the US presidential election could mean that there could be further tax cuts, immigration and tariffs could keep pressure on inflation and the borrowings of the government could rise which would complicate the situation.
According to Lindsay James, investment strategist at Quilter Investors, “On both sides of the pond, we are seeing expectations for future rate cuts being scaled back considerably compared to what many had originally hoped for. In the US, it seems interest rates will stay higher for longer as the Fed will need to tread very carefully until it is better able to assess the true impact of Trump’s plans,” reported BBC.
Federal Reserve chairman Jerome Powell said that it was too early to predict or say anything regarding the President-elect Donald Trump’s administration’s agenda and its effect on the US economy.
Fed Chair Jerome Powell’s term is slated to end in May 2026 and when asked by reporters during the press brief if he is asked by President-elect Donald Trump to resign, he said he would say no adding that firing any of the Fed’s seven governors was “not permitted under the law.”
