Federal Reserve cuts rates by 25 basis points; US stocks scale record highs 

This was the second consecutive rate cut by the US central bank. 

Michelle Bowman is an American attorney who has served as a member of the Federal Reserve Board of Governors since 2018.

“The Committee judges that the risks to achieving its employment and inflation goals are roughly in balance,” the document said, a change from September when it noted “greater confidence” in the process.

The statement slightly downgraded the labor market, saying “Conditions have generally eased, and the unemployment rate has moved up but remains low.” The committee again said the economy “has continued to expand at a solid pace.”

In a press conference after the announcement, Fed Chair Jerome Powell said Tuesday's election, in which Republican Donald Trump was elected president, will have no effects on policy decisions in the near term. He also said some of the downside risks to the economy have diminished amid stronger economic data.

The Federal Open Market Committee (FOMC) indicated in September that members expected a half percentage point more in cuts by the end of this year and then another full percentage point in 2025. The September “dot plot” of individual officials’ expectations pointed to a terminal rate of 2.9%, which would imply another half percentage point of cuts in 2026. 

"Regarding future rate cuts, traders expect the Fed will likely approve another quarter-point cut in December and then pause in January as it assesses the impact of its tightening moves, according to the CME Group’s FedWatch tool," the CNBC report said further. 

US stocks jump post Fed rate cut

Shares on Wall Street scaled record highs on Thursday. At the same time, US Treasury yields retreated further after the Federal Reserve cut interest rates and as investors processed a second Donald Trump presidency.

The S&P 500 rose 0.74%, the Dow Jones Industrial Average was flat, and the Nasdaq Composite jumped 1.5%. The S&P 500 and the Nasdaq both ended at all-time highs for a second consecutive day. The MSCI index for world stocks climbed 0.9%, also to a record high.