November Fed Meeting Live Updates: Fed readies a second consecutive interest rate cut

Prepare for another interest rate cut

Today’s the day: The Federal Reserve is about to announce what it decided to do with interest rates at its November meeting. 

We already know what the Fed is likely to do: Cut interest rates by a quarter of a percentage point. The move would bring the key benchmark borrowing rate that impacts the price consumers pay to borrow money down to 4.5-4.75 percent, the lowest since the spring of 2023. 

Still, the moment is fraught with uncertainty that could impact policymakers’ next moves. For starters, Fed officials are lacking clarity on the U.S. economy when they need it most. U.S. employers created just 12,000 jobs last month, an unexpectedly weak number that could’ve been distorted by strikes and hurricanes.

On the other hand, fears about a rapid deterioration in the job market have calmed since the Fed’s September gathering. Another wrinkle: President Donald Trump won his bid for reelection on Tuesday, and his proposals for more corporate tax cuts and tariffs could interrupt recent declines in inflation, economists say. 

Here are the four biggest questions I have surrounding the Fed’s September meeting

• Is a rate cut in December a done deal? Policymakers say rates are not on a predetermined course. Economists I talk to say the resilient economy raises the likelihood of the Fed cutting less than expected.
• What would get the Fed to *not* cut interest rates? Officials have said they wouldn’t abandon rate cuts just because the economy and job growth are strong. What would they have to see to justify not cutting interest rates?
• When will they want to pause its rate cuts? Speaking of a pause, we know it’s coming eventually. Fed officials projected only four rate cuts across its eight meetings next year. Officials would likely need to feel comfortable with where interest rates currently stand if they were to make that decision. But that requires answering an even more complicated question: How high should interest rates be right now?
• Is inflation still on the descent? Fed officials would likely wait for the rubber to meet the road before changing their game plan in response to the tariffs and tax cuts that Trump promised on the campaign trail. Yet, estimates from Moody’s Analytics have projected that inflation could rise to at least 3% next year if Trump follows through with a universal 20% tariff and 60% levy on imports from China. 

The economy doesn’t look like it needs as much as saving as it did when the Fed last met in September

You might as well say the Fed’s surprising jumbo half-point interest rate cut was the equivalent to taking out some insurance against an economic slowdown. Fears were swirling that the U.S. job market was rapidly deteriorating, after data from over the summer showed that unemployment unexpectedly surged to 4.3 percent and job growth slowed massively. To lower the risk of being behind the curve, Fed officials decided to kickstart their new, lower-rate era by moving forcefully out of the gate.

But the U.S. economy looks a bit brighter these days — and it’s too soon to chalk it up to the Fed’s rate cut, since it takes almost a year, if not more, for lower rates to filter through the economy. Really, what’s happened is, slumps in job growth from over the summer were revised up. Meanwhile, the U.S. economy grew a healthy 2.8 percent pace last quarter, bolstered by strong consumer spending. 

Inflation has slowed massively since it peaked at four-decade high in the summer of 2022. Prices rose 2.1 percent in September, roughly in line with the Fed’s 2 percent target, according to the Fed’s preferred inflation gauge, the personal consumption expenditures (PCE) index. It’s giving the Fed the clearance to continue cutting interest rates, yet stronger than expected growth is making them more cautious.