US Treasury yield data from official financial publications

Fed Cuts Rates to 4.5%-4.75% in Second Consecutive Cut After Trump Victory

Nov 7, 2024, 11:48 AM

The Federal Reserve cut its benchmark interest rate by 25 basis points on Thursday, in line with widespread market expectations. This marks the second consecutive rate cut this year, bringing the federal funds rate down to a range between 4.5% and 4.75%. The unanimous decision reflects the central bank's response to cooling inflation and growing post-election uncertainties following Donald Trump's presidential election victory. Treasury yields have jumped since the last rate cut in September, adding pressure on the Fed's policy decisions. The Fed emphasized its data-dependent approach, indicating that future monetary policy adjustments will be guided by economic developments. Markets had largely anticipated the move, with Fed funds futures pricing in a near-100% probability of the rate cut ahead of the announcement. However, expectations for additional cuts in the upcoming meetings have diminished, with CME Fed Fund futures showing only a 65% chance of another 25 basis point cut in December, down from 77% yesterday. The central bank faces an increasingly difficult position due to political shifts and lingering inflation concerns.