Summary
The Federal Reserve cut its key interest rate Thursday by a quarter-point. The rate cut follows a larger half-point reduction in September. It reflects the Fed’s renewed focus on supporting the job market as well as fighting inflation.
The Fed had kept its rate that high for more than a year to fight the worst inflation streak in four decades. Annual inflation has since fallen from a 9.1% peak in mid-2022 to a 3 1/2-year low of 2.4% in September.
The job market and the economy are looking healthier than they appeared in September. Investors have pushed up Treasury yields since the central bank cut rates in September, thereby diminishing the benefit to consumers.
The economy grew at a solid annual rate just below 3% over the past six months. But companies have scaled back hiring, with many people who are out of work struggling to find jobs.
