WASHINGTON (AP) — No one knows who will win Tuesday’s presidential election. However, two days later, the Federal Reserve will likely lower interest rates. This is because inflation is going down.
The Federal Reserve will meet on Thursday. They will probably cut the interest rate by a quarter-point to around 4.6%. They had already cut it before, in September. Lower interest rates help people and businesses borrow money more easily.
Usually, the Fed lowers rates to help a weak economy. But today, the economy is strong. The unemployment rate is low at 4.1%. So the Fed is lowering rates to adjust to lower inflation, which is now at 2.4%.
Some people worry that if Donald Trump wins the election, he might bring back high tariffs. This could make prices go up again. If prices go up, the Fed might have to raise rates again.
Powell, the Fed Chair, will answer questions about the election on Thursday. He will say that the Fed makes its decisions based on the economy, not politics.
Vocabulary List:
- Federal Reserve /ˈfɛd.ər.əl rɪˈzɜrv/ (noun): The central banking system of the United States.
- Inflation /ɪnˈfleɪʃən/ (noun): A general increase in prices and fall in the purchasing value of money.
- Tariffs /ˈtær.ɪf/ (noun): Taxes on imported goods.
- Economy /ɪˈkɒn.ə.mi/ (noun): The system of production distribution and consumption of goods and services in a country.
- Unemployment /ˌʌn.ɪmˈplɔɪ.mənt/ (noun): The state of not having a job despite being willing to work.
- Adjust /əˈdʒʌst/ (verb): To change something slightly to achieve the desired fit appearance or result.
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