Subscribe to enjoy similar stories. Federal Reserve officials are expected to cut interest rates by a quarter percentage point at their meeting Thursday because inflation has continued to make progress toward their 2% goal. Officials began lowering rates at their previous meeting in September by making a larger half-point cut.
They are trying to figure out where, exactly, rates should settle after high inflation over the past three years led to a dramatic series of rate increases. “We’re entering this new phase: Policy is going to become less restrictive over time, and that’s because the Fed is more confident on where inflation is going—that it’s going back down to 2%," said Loretta Mester, who retired as Cleveland Fed president in June after 10 years in the job. This week’s meeting should lack the suspense of the prior one, in which markets were left guessing over the size of the first rate cut in four years.
Officials would like to avoid the spotlight because their meeting concludes two days after the presidential election, and the Fed strives to maintain an apolitical DNA. Tuesday’s election also prompted the Fed to push back its meeting by a day. The central bank, which typically concludes its two-day meetings on Wednesdays, will do so this time on Thursday.
While this week’s meeting may lack drama, officials face potentially thorny debates in the months to come. First is the decision on where rates should settle. Second, while the election result won’t influence this week’s decision, any policy changes by the next president and Congress that reshape the economic outlook could also alter the Fed’s interest-rate path.
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