The US central bank cut interest rates for the second time in a row, as the independent agency’s future becomes uncertain under Donald Trump’s second presidency.
The Federal Reserve Bank, commonly known as the Fed, cut interest rates to 4.5% from 4.75%. Unlike the UK, the US interest rate is a range to guide lenders rather than a single percentage.
but As is the case with the United Kingdom, It is only the second time in more than four years that the US regulator has cut interest rates.
Interest rates fell as inflation fell to 2.4%, a level not far from the Fed’s 2% target, and the Biden administration’s weakest jobs report was published in September. The regulatory body is charged with maintaining price stability and maximum employment in the United States.
The cut also comes after recession fears in the US in August sparked a wave of recession Global stock market sell-offs.
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On Thursday, the Federal Reserve’s Open Market Committee said that “economic activity in the United States continued to expand at a robust pace,” adding that while monthly job gains slowed, “labor market conditions generally deteriorated.”
“The economy is generally strong and has made significant progress toward our goals over the past two years,” Fed Chairman Jerome Powell said.
When asked about Mr. Trump Winning the 2024 elections“In the near term, the elections will have no impact on our political decisions,” he insisted.
Powell had a tense relationship with Trump – who would become president again After his inauguration in January.
Although Trump appointed Powell in 2018, he considered firing him because he refused to cut interest rates sharply.
Trump recently said he wouldn’t fire Powell, but during his first term in office he called the Fed chief “ignorant” and an “enemy.”
Speaking at the press conference on Thursday, Powell bluntly said “no” when asked if he would resign if Trump asked him to.
He later said that it was “not permissible under the law” for the president to fire the head of the Fed or any other Fed governor in a leadership position.
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What’s next for the Fed?
Even if Powell remains in office until his term ends in May 2026, there are questions about the Fed’s independence.
Trump has promised that interest rates will fall during his presidency, something he has no control over while the Fed operates independently of the government.
Comments on monetary policy are usually avoided by politicians, who defer to central banks to respect their independence.
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Even under existing structures, Trump can influence the Fed’s decision-making process by appointing board members—subject to approval by the Republican-controlled Senate—as their terms expire in early 2026.
The Federal Reserve became independent in 1951 so that it could take action to reduce inflation without political interference.