The Federal Reserve has announced a cut to its lending rate, bringing it down to a range of 4.5%-4.75%. This marks the second reduction in succession following a historic drop made in September, as the Fed expressed cautious confidence in the stabilization of rising prices. However, with Trump's election unfolding new fiscal and economic policy uncertainties, analysts predict that borrowing costs may continue to decline, albeit with contingencies.

Concerns linger regarding Trump's proposed tax cuts, potential changes to immigration policies, and imposition of tariffs, which could introduce inflationary pressures and complicate government borrowing dynamics. Subsequently, interest rates attached to US debt surged this week amidst these apprehensions.

The Fed's lending rate influences overall borrowing costs across various financial products, including mortgage and credit card rates. Following a spectacular rise in borrowing rates over the preceding two decades, exemplified by a sharp increase to approximately 5.3% in response to inflationary spikes in 2022, this recent adjustment of 0.25 percentage points was largely anticipated.

Despite acknowledging progress in curtailing inflation—from a peak of over 9% in June 2022 down to 2.4% in September—Federal Reserve officials reiterated their dual commitment to price stability and maintaining a robust job market.