Fed rate cuts: a financial tool creating a “window of opportunity” ahead of Trump’s inflationary impact

On December 18, 2024, the US Central Bank cut its key policy rate by 0.25% to 4.5%. This was the third key policy rate cut in 2024, despite fears that the move would trigger a new round of inflation.

The Fed’s cut in the discount rate under Jerome Powell before Donald Trump’s inauguration demonstrates the opening of a window of opportunity for a temporary revival of economic activity.

Lower credit costs for businesses and households will stimulate consumer demand and investment, creating the illusion of a short-term increase in economic activity in the United States.