The Federal Reserve voted to reduce its federal funds rate today, marking the second rate cut in a row for the central bank. After more than two years of prohibitively high rates amid stubbornly high inflation, the Fed started cutting rates in September and followed suit this month.
Policymakers voted to lower their benchmark interest rate by 0.25 percentage points in November, a smaller cut compared to the half-point cut they implemented in September. The reduction to a range of 4.50% to 4.75% was expected by many analysts, who predict another cut may come in December.
However, Donald Trump’s presidential election win has made the Fed’s future plans less certain. The central bank will need to consider how Trump’s policies could influence labor and inflation as it weighs future reductions. Some investors are concerned that inflation might rise as a result of Trump’s trade policies, stalling future cuts.
“The past few meetings have pointed to the Fed’s intention to support a softening labor market,” says Nathan Hoyt, chief investment officer at Regent Peak Wealth Advisors. “While inflation is still higher than the market is accustomed to, it’s slowed enough for them to justify a more accommodative policy.”