Federal Reserve Lowers Rates by 25 Basis Points, Powell Sets Aside Resignation Concerns

The Federal Reserve cut interest rates to a range of 4.5 to 4.75 per cent on November 7. Federal Chair Jerome Powell, in a media interaction after the announcement of the rate cut, said he “feels good about the economic activity”. He said that the Fed is undertaking rate cut measures as monetary policy remains tight and the move is to ensure maximum employment and price stability. 

“We think that even today’s cut, policy is still restrictive,” Powell said. “The federal government’s fiscal path, fiscal policy, is on an unsustainable path,” he added. 

He mentioned that the 2024 US presidential election result will have no immediate impact on the economy. “In the near term, the election will have no effects on our policy decisions,” said Jerome H. Powell. 

This is the second time in 2024 that the US’s central bank has announced the rate cut. Earlier in September this year, the federal reserve cut its interest rate by 50 basis points. 

The Fed chair stated that the central bank will keep an eye on economic data before deciding to make a final rate cut of 2024 in their upcoming meeting in December. He mentioned the December rate cut is possible but not guaranteed. 

“As we move ahead, we are prepared to adjust our assessments of the appropriate pace and destination of interest cut,” he said. 

Fed chair’s future uncertain as Trump regains power 

Earlier this year, Donald Trump, in an interview with Fox Business, said that if he is re-elected as the US President, he will not reappoint federal reserve chair Jerome Powell. Trump alleged that the fed rates cut move by Powell is to help Democrats win elections. 

“It looks to me like he’s trying to lower interest rates for the sake of maybe getting people elected...,” Trump told Fox Business. 

Trump’s criticism is startling, as he was the one to nominate Powell as the chair of the Fed in 2017. 

While addressing a press conference on November 7 after the federal rate cut announcement, Powell mentioned that he would not resign even if the newly re-elected President Trump asked him to step down. “Such an action not permitted under the law,” he added. 

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