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WASHINGTON — The Federal Reserve cut its key interest rate Thursday by a quarter-point in response to the steady decline in the once-high inflation.
The rate cut follows a larger half-point reduction in September, and it reflects the Fed’s renewed focus on supporting the job market as well as fighting inflation, which now barely exceeds the central bank’s 2% target.
Thursday’s move reduces the Fed’s benchmark rate to about 4.6%, down from a four-decade high of 5.3% before September’s meeting. 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.
In a statement after its latest meeting ended, 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.”
After their rate cut in September – their first such move in more than four years – the Fed’s policymakers had projected that they would make further quarter-point cuts in November and December and four more next year.
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