THE STORY
The Federal Reserve said Wednesday it was lowering interest rates by by half a percentage point, the largest cut in almost four years.
The decision comes as job gains had slowed while inflation had made further progress toward its 2% goal.
Fed Chair Jay Powell said the labor market and the economy in general remain in “solid shape.”
“We’re trying to achieve a situation where we restore price stability without the kind of painful increase in unemployment that has come sometimes with this inflation,” Powell said. “That’s what we’re trying to do, and I think you could take today’s action as a sign of our strong commitment to achieve that goal.”
At a rally in North Carolina, GOP vice presidential nominee JD Vance blamed Vice President Kamala Harris, the Democratic presidential nominee, for policies that required rates to go higher.
“That’s number one why housing prices are so high,” he said.
GOING IN DEPTH
The federal funds rate will now move down to about 4.8%, the lowest level since March 2023 and less than 50 days to go until the election.
Harris said that while Wednesday’s rate announcement was “welcome news for Americans who have borne the brunt of high prices,” she remains focused “on the work ahead to keep bringing prices down.”
“I know prices are still too high for many middle class and working families, and my top priority as President will be to lower the costs of everyday needs like health care, housing, and groceries.”
Former President Donald Trump, the Republican presidential nominee, has previously said presidents “should have a say” in how interest rates are decided. Powell disagreed with that on Wednesday.
“Our job is to support the economy on behalf of the American people,” Powell said, “and if we get it right, this will benefit the American people significantly.”
