Fed cuts interest rates, delivering relief for borrowers at last meeting before Trump takes office
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(WASHINGTON) — The Federal Reserve cut interest rates by a quarter of a percentage point on Wednesday, delivering relief for borrowers at the central bank’s last meeting before President-elect Donald Trump takes office next month.
The central bank predicted fewer rate cuts next year than it had previously indicated, however, suggesting concern that inflation may prove more difficult to bring under control than policymakers thought just a few months ago.
The major stock indexes inched downward in trading after the announcement in response to the forecast of fewer rate cuts.
Speaking at a press conference in Washington D.C. on Wednesday, Fed Chair Jerome Powell said the central bank may proceed at a slower pace with future rate cuts, in part because it has now lowered interest rates a substantial amount.
Powell also said a recent resurgence of inflation influenced the Fed’s expectations, noting that some policymakers considered uncertainty tied to potential policy changes under Trump.
“It’s common-sense thinking that when the path is uncertain, you get a little slower,” Powell said. “It’s not unlike driving on a foggy night or walking around in a dark room full of furniture.”
The move marked the third consecutive interest rate cut since the Fed opted to start dialing back its fight against inflation in the fall. The Fed has lowered interest rates by a percentage point in recent months.
However, the Fed’s forecast on Wednesday said it anticipates only a half a percentage point of rate cuts next year and another half-percent cut in 2026.
The benchmark interest rate helps determine loan payments for everything from credit cards to mortgages. Even after recent cuts, the Fed’s interest rate remains at a historically high level of between 4.25% and 4.5%.
The size of the interest rate cut on Wednesday matched investors’ expectations.
The latest rate cut may prove the Fed’s last for many months, experts previously told ABC News.
A recent bout of stubborn inflation could prompt central bankers to freeze interest rates in place as they bring price increases under control. A humming economy, meanwhile, shows little need for the jolt of activity that lower borrowing costs may provide, the experts said.
Consumer prices climbed 2.7% in November compared to a year ago, marking two consecutive months of accelerating inflation, government data last week showed.
Inflation has slowed dramatically from a peak of more than 9% in June 2022. But the recent uptick has reversed some progress made at the start of this year that had landed price increases right near the Fed’s target of 2%.
In August, Trump said the president should have a role in setting interest rates. The proposal would mark a major shift from the longstanding norm of political independence at the Fed.
Powell struck a defiant tone last month when posed with the question of whether he would resign from his position if asked by Trump.
“No,” Powell told reporters assembled at a press conference in Washington, D.C., blocks away from the White House.
When asked whether Trump could fire or demote him, Powell retorted: “Not permitted under the law.”
(NEW YORK) — Tech billionaire Elon Musk, who has vowed to dismantle thousands of federal regulations as the co-head of a new Department of Government Efficiency, or DOGE, says the nation’s financial security depends on it.
The U.S. risks “strangulation by regulation” as it hurtles toward “bankruptcy super fast,” Musk said in a pair of posts on X this month.
Musk’s general concern about the nation’s multi-trillion dollar debt reflects worry among many economists, and his slash-and-burn rhetoric mirrors that of close ally President-elect Donald Trump.
The ambitious cuts championed by Musk, however, could imperil an array of federal protections that safeguard against harm in just about every corner of American life, regulatory experts told ABC News.
Regulations ensure air and water remain free of toxic pollution, workers receive safety gear and overtime pay, drugs undergo rigorous testing and corporations steer clear of ripping off customers.
“Revoking regulations or refusing to endorse them will endanger people’s lives,” Michael Gerrard, a law professor at Columbia University who specializes in environmental regulation, told ABC News. “I’m very worried.”
In response to ABC News’ request for comment, the Trump transition team touted the involvement of Musk and his plans for streamlining U.S. government.
“Elon Musk and President Trump are great friends and brilliant leaders working together to Make America Great Again. Elon Musk is a once in a generation business leader and our federal bureaucracy will certainly benefit from his ideas and efficiency,” Brian Hughes, a transition spokesperson, told ABC News.
DOGE, the commission co-led by Musk and entrepreneur Vivek Ramaswamy, plans to recommend a “vast reduction” of federal regulations, the two leaders said in a joint op-ed in The Wall Street Journal last week.
Such regulatory cuts would diminish the workload of government agencies, allowing for a significant reduction of federal workers and department budgets, the DOGE leaders said. They recommended a mandate that all federal workers come to the office five days a week, which they claimed would trigger a wave of resignations.
“Now is the moment for decisive action,” Musk and Ramaswamy said, but the pair did not identify specific regulations that they would like to cut.
Musk did not immediately respond to ABC News’ request for comment. Neither did Ramaswamy.
The promise of regulatory cuts may prove more compelling as a declaration of war against the status quo than a nitty-gritty elimination of individual rules, experts said. They pointed to significant legal hurdles faced in unwinding government regulations, as well as the lack of direct authority available to DOGE, a non-governmental entity.
Plus, the experts added, many government regulations involve direct protections of importance to a swath of Americans.
Some experts pointed for instance to an air-quality standard put in place by the Biden administration in February. The regulation lowered the amount of particulate matter air pollution — commonly known as soot — allowable in the nation’s air.
The rule would prevent as many as 4,500 premature deaths and 800,000 cases of asthma symptoms, an Environmental Protection Agency study found. Those health benefits could translate into as much as $46 billion in savings by 2032, the agency said.
The Trump administration may seek to undo the rule as part of wider regulatory cuts, Gerrard said. On the campaign trail, Trump vowed to cut environmental regulations in an effort to ease the burden on businesses, but he did not mention this specific rule. Trump rolled back nearly 100 environmental regulations during his first term, including rules governing clean air, a New York Times analysis found.
Darren Riley, co-founder of an air-quality data startup called JustAir, who was diagnosed with asthma six years ago, said air safety should transcend party politics.
“We should take whatever precautions and procedures necessary to protect the air we breathe and the water we drink as a right to life,” Riley told ABC News.
Workplace safety marks another focus of federal regulation that could draw scrutiny from the Trump administration.
In July, the Biden administration formally proposed a heat-safety rule that would require workplaces with elevated heat risks to provide adequate water, rest breaks and control of indoor temperature.
Shae Parker suffered from dizziness and nausea during bouts of heat exhaustion while working this summer at a Speedway gas station in Columbia, South Carolina, she told ABC News. One year prior, record heat in the area caused similar symptoms during Parker’s shifts at Waffle House, but management failed to provide adequate air conditioning, she said.
Parker has traveled to Washington, D.C., to advocate for the heat safety rule, and she worries that the Trump administration may set aside the regulation.
“Trump really needs to set the heat standard, and if he doesn’t, it’s like he doesn’t care about the country,” Parker said. “He needs to take our lives seriously.”
Waffle House did not immediately respond to ABC News’ request for comment. Neither did 7-11, the parent company of Speedway.
Over three decades ending in the early 2020s, nearly 1,000 workers in the U.S. died from excessive heat exposure, amounting to about 34 deaths per year, an EPA study in June found.
The proposed regulation is in the midst of a public comment period as part of the rule-making process. That phase ends in December, leaving little time for finalization and implementation of the measure before Trump takes office. The Trump administration may very well abandon the rule, experts told ABC News.
“Workers will be on their own when it comes to heat,” Debbie Berkowitz, a former official in the U.S. Occupational Safety and Health Administration under then-President Barack Obama, told ABC News.
For his part, Musk previously said DOGE would incorporate feedback from everyday people about which regulations it would recommend cutting. “Anytime the public thinks we are cutting something important or not cutting something wasteful, just let us know!” Musk said in a post on X earlier this month.
Musk has also said that the nation’s worsening debt will force an increased portion of U.S. tax payments to go to interest payments on such borrowing, rather than to government services.
William Buzbee, a professor of administrative law at Georgetown University who focuses on environmental regulation, said the outcome of Musk’s efforts remains highly unclear. But he will likely face legal pushback as well as backlash from people who would be impacted by the potential rollback of a given regulation.
“The bottom line is, yes, the Trump administration is quite clearly planning to go in a deregulatory direction,” Buzbee said. “It won’t be easy.”
(NEW YORK) — Shares of Netflix climbed about 9% in early trading on Friday after a strong earnings report propelled by hit shows like “Nobody Wants This” and “The Perfect Couple.”
The company added about 5 million subscribers over a three-month period ending in September, which marked a roughly 40% decline from the same period one year prior.
Even so, the subscriber gains contributed to revenue totaling nearly $10 billion, in part due to the growth in popularity a subscription tier that includes advertisements, the earnings report on Thursday said. That sales figure marked 15% jump when compared with the same period one year prior.
In all, Netflix boasts about 282 million subscribers worldwide, making it the most popular streaming service by a wide margin. By comparison, Warner Bros. Discovery counts roughly 103 million subscribers across its services HBO, HBO Max and Discovery +, an earnings report in August showed.
“We’re feeling really good about the business,” Ted Sarandos, the company’s co-CEO, said on a conference call with Wall Street analysts.
Notable programs from the most recent quarter included the latest season of “Emily in Paris,” as well as movies like “Monster High 2” and “Rebel Ridge.” The company also expanded its live broadcasts, featuring a face-off between hot dog-eating rivals Takeru Kobayashi and Choey Chestnut in September.
On the earnings call, Netflix touted viewership of about two hours per user each day, which the company said indicated an increase so far this year when compared to last year.
The company expects continued growth next year due to a slate of programming that includes new seasons of top shows like “Wednesday” and “Squid Game,” as well as an additional installment in the “Knives Out” film series, Netflix said.
Netflix forecasted as much as $44 billion in revenue next year, which would amount to about a 13% increase over current performance.
Even after expanding its audience, Netflix still captures less than 10% of television viewership in the countries where the platform is most popular, Netflix said.
“There’s a huge opportunity to grow,” Gregory Peters, a co-CEO at Netflix, said on Thursday.
(NEW YORK) — The federal appeals court that last week rejected TikTok’s attempt to overthrow its pending ban denied the company’s request Friday that sought to pause the ruling and the Jan. 19 deadline for a sale.
The company, which has been forced by a federal law to sell to a new owner or be banned in the U.S., requested the emergency pause earlier in the week arguing it would afford the Supreme Court time to determine whether it should review the law.
However, the D.C. Circuit judges said that Congress made a “deliberate choice” to set a 270-day time frame for the sale-or-ban, “subject to one (and only one) extension.”
“The petitioners have not identified any case in which a court, after rejecting a constitutional challenge to an Act of Congress, has enjoined the Act from going into effect while review is sought in the Supreme Court,” the judges wrote in the unsigned order.
TikTok has not immediately commented about the order.
The Justice Department asked the court to reject TikTok’s request for a temporary injunction.
“The Court is familiar with the relevant facts and law and has definitively rejected petitioners’ constitutional claims in a thorough decision that recognizes the critical national-security interests underlying the Act,” the DOJ’s attorneys said.
The Justice Department did not immediately comment on the decision either.
The case would have to go to the Supreme Court if TikTok chooses to appeal, which could delay the Jan. 19 deadline.
President Joe Biden signed the Protecting Americans from Foreign Adversary Controlled Applications Act, which was part of a massive, $95 billion foreign aid package passed by Congress, on April 24.
As part of the act, TikTok, which has over 170 million U.S. users, is forced to sell the company from its current Chinese-based owner ByteDance.
The president and some congressional leaders have argued that the ultimatum against TikTok was necessary because of security concerns about ByteDance and its connections to the Chinese government.
ByteDance rebutted those allegations in its lawsuit, arguing there has been no tangible evidence that the app poses any security risk and filed a lawsuit against the Justice Department in May.
The law has prompted major protests from TikTok’s American users who have defended the app.
President-elect Donald Trump once proposed a TikTok ban when he was in office but has changed his stance and signaled he would reverse the ban once in office. A reversal, however, would require approval from both houses of Congress.
