WASHINGTON — The Federal Reserve cut its key interest rate by a quarter point on Thursday in response to the steady decline in once-high inflation that angered Americans and helped Donald Trump win this week’s presidential election .

The rate cut follows a half-point cut in September and reflects the Fed’s renewed focus on supporting the labor market as well as tackling inflation, which is now barely above the central bank’s 2 percent target.

Thursday’s move cuts the Fed’s benchmark rate to about 4.6 percent, down from a four-decade high of 5.3 percent before the September meeting. The Fed has kept rates so high for more than a year to battle the worst run of inflation in four decades. Annual inflation has since fallen from a peak of 9.1% in mid-2022 to a 3½-year low of 2.4% in September.

The Fed’s announcement was well anticipated by investors and generated little reaction on Wall Street. The Dow Jones Industrial Average was basically flat and down less than a point, while the Nasdaq Composite rose 1.5 percent and the S&P 500 climbed 0.7 percent to help fuel Wednesday’s post-election gains .

Asked at a news conference how Trump’s election might affect the Fed’s policymaking process, Chairman Jerome Powell said that “in the short term, the election will have no effect on our (interest rate) decisions.”

But Trump’s election, beyond its economic consequences, has raised the specter of White House meddling in the Fed’s policy decisions. Trump has proclaimed that as president he should have a say in the central bank’s interest rate decisions. The Fed has long guarded its role as an independent institution capable of making tough decisions about lending rates without political interference. However, during his previous tenure in the White House, Trump publicly attacked Powell after the Fed raised interest rates to fight inflation, and he may do so again.

Asked at Thursday’s news conference if he would step down if Trump asked him to, Powell, who will have one year left on his second four-year term as Fed chairman when Trump takes over, simply replied: “No “.

And he said that, in his opinion, Trump could not fire or demote him: “It will not be allowed by law,” Powell said.

In a statement after the end of its last meeting, the Fed said “the unemployment rate has risen but remains low” and while inflation has fallen closer to the 2% target level, it “remains somewhat elevated”.

After cutting interest rates in September — their first such move in more than four years — Fed policymakers estimated they would make further cuts of a quarter point in November and December and four more next year. But with the economy now mostly solid and Wall Street anticipating faster growth, larger budget deficits and higher inflation under a Trump presidency, further rate cuts may have become more unlikely.

“Various policy uncertainties may cause the Fed to move more slowly than it would otherwise,” said Michael Feroli of JPMorgan Chase & Co. in a research note on Wednesday.

This week’s Fed meeting lacks the drama of September, when the Fed itself was split on how much to cut and a governor issued a rare dissent.

Still, Wall Street will be watching closely for signs of how much the Fed plans to cut rates in the coming months. Fed officials signaled before the election that they see rates continuing to gradually decline. Their goal is to achieve a so-called neutral rate that does not constrain or stimulate economic growth. But it is not clear what this rate is and cannot be observed.

Analysts and futures investors believe another quarter-percentage-point cut is possible at the Fed’s final 2024 meeting in December, although the pace of further cuts next year is uncertain.

Powell said the Fed plans, over time, to continue cutting its key rate toward what the central bank calls “neutral” — a level that neither constrains nor stimulates growth. He and other officials admitted they don’t know exactly where the neutral rate is.

“We are on a path to a more neutral stance,” the Fed chairman said. “That hasn’t changed at all. We’ll just have to see where the data is.”

The economy clouds the picture with mixed signals, with solid growth but weakening employment. Consumer spending, however, was healthy, fueling concerns that there is no need for the Fed to cut borrowing costs and that doing so could overstimulate the economy and even re-accelerate inflation.

Financial markets are throwing another curveball at the Fed: Investors have pushed up Treasury yields since the central bank cut interest rates in September. The result was higher borrowing costs across the economy, diminishing the consumer benefit of the Fed’s half-point cut in its benchmark rate, which it announced after its September meeting.

Broader interest rates rose as investors anticipate higher inflation, larger federal budget deficits and faster economic growth under President-elect Trump. Trump’s plan to impose at least a 10 percent tariff on all imports, as well as significantly higher taxes on Chinese goods and carry out a mass deportation of undocumented immigrants would almost certainly trigger higher inflation. This would make it less likely that the Fed would continue to cut its key rate. Annual inflation, as measured by the central bank’s preferred gauge, fell to 2.1% in September.

Economists at Goldman Sachs estimate that Trump’s proposed 10 percent tariff, as well as his proposed taxes on Chinese imports and cars from Mexico, could push inflation back to about 2.75 percent to 3 percent by mid-2026.

Interest rate cuts by the Fed typically lead to lower borrowing costs for consumers and businesses over time. However, this time mortgage rates fell in anticipation of interest rate cuts, but have since rebounded as the economy grew rapidly, fueled by consumer spending. High borrowing costs not only for mortgages but also for auto loans and other major purchases, even as the Fed cuts its benchmark rate, has created a potential challenge for the central bank: Its effort to support the economy by lowering borrowing costs may not bear fruit if investors act to raise long-term borrowing rates.

The economy grew at a solid annual rate of just under 3 percent over the past six months, while consumer spending — fueled by higher-income shoppers — grew strongly in the July-September quarter.

But companies have cut back on hiring, with many unemployed people struggling to find jobs. Powell suggested the Fed was cutting its key rate in part to support the labor market. However, if economic growth continues at a healthy pace and inflation rises again, the central bank will come under increasing pressure to slow or stop interest rate cuts.

Information for this article was provided by Christopher Rugaber and Stan Choe of The Associated Press Andrew Ackerman and Rachel Siegel of The Washington Post.

Remarks by Federal Reserve Chairman Jerome Powell appear on a bank of screens on the floor of the New York Stock Exchange, Thursday, Nov. 7, 2024, in New York. (AP Photo/Richard Drew)

Federal Reserve Board Chairman Jerome Powell speaks during a news conference at the Federal Reserve in Washington, Thursday, Nov. 7, 2024. (AP Photo/Mark Schiefelbein)

Federal Reserve Board Chairman Jerome Powell speaks during a news conference at the Federal Reserve in Washington, Thursday, Nov. 7, 2024. (AP Photo/Mark Schiefelbein)

Federal Reserve Board Chairman Jerome Powell speaks during a news conference at the Federal Reserve in Washington, Thursday, Nov. 7, 2024. (AP Photo/Mark Schiefelbein)

Federal Reserve Board Chairman Jerome Powell speaks during a news conference at the Federal Reserve in Washington, Thursday, Nov. 7, 2024. (AP Photo/Mark Schiefelbein)

Federal Reserve Board Chairman Jerome Powell speaks during a news conference at the Federal Reserve in Washington, Thursday, Nov. 7, 2024. (AP Photo/Mark Schiefelbein)

A screen at a trading desk at the New York Stock Exchange shows the Federal Reserve’s interest rate decision Thursday, Nov. 7, 2024. (AP Photo/Richard Drew)