The Fed’s announcement that it was easing its main interest rate by a quarter percentage point caused few ripples in the market because even the size of it was so well anticipated by investors.
The central bank began cutting rates in September and indicated more easing was likely to come, as it focuses more on keeping the job market humming after helping get inflation nearly down to its 2% target. What’s less certain in the minds of investors is how much Trump’s victory may complicate things for the Fed.
Trump is pushing for tariffs and other policies that economists say could drive inflation higher, along with the economy’s growth. Traders have already begun paring forecasts for how many cuts to interest rates the Fed will deliver next year because of that. Expectations for such cuts have been a major reason the S&P 500 has set dozens of records already this year.
For now, Fed Chair Jerome Powell said, nothing is changing. “In the near term, the election will have no effects,” he said.
With any president, Powell said the Fed looks at possible policy changes and simulates how they could affect the economy. And only after looking at the net, overall effect of all the policies do they decide how that should shape interest-rate policy. At this point, Powell said it’s still not clear exactly what the policy changes will be after Trump returns to the White House.
“We don’t guess, we don’t speculate and we don’t assume,” he said.
