US Federal Reserve cuts key interest rates by quarter-point

The US Federal Reserve cut on Thursday its key interest rates by a quarter of a percentage point, one day after Donald Trump returned to the US presidency.

Policymakers voted unanimously to lower the US central bank's key lending rate to between 4.50% and 4.75%, the Fed announced in a statement

The Fed said its decision came in response to the decline in the once-high inflation, which is now inching closer to the central bank's 2% target. It also cited the improvement in the job market.

This is the second rate cut in a row, and it reflects the Fed's renewed focus on supporting the job market and fighting inflation.

What did the Fed say?

In a statement, the Fed said the “unemployment rate has moved up but remains low,” while inflation has fallen closer to the central bank’s target but “remains somewhat elevated.” 

"Economic activity has continued to expand at a solid pace," the central bank's rate-setting Federal Open Market Committee meanwhile said at the end of a two-day policy meeting.

Donald Trump’s election has also raised the specter of meddling by the White House in the Fed’s policy decisions. 

Trump has said that as president, he seeks to have a say in the central bank’s interest rate decisions, while the Fed has long guarded its role as independent and kept any political interference at bay. 

During Trump’s previous term, he publicly attacked Fed Chair Jerome Powell, whom he had appointed first to run the US central bank, for raising rates to fight inflation.

ft/rmt (AFP, Reuters)