Fed poised to cut rates once again

Stock futures were higher in the US ahead of the Federal Reserve rate decision, set to be released at 2 pm ET. Futures on the Dow and S&P were up around 0.2% and Nasdaq futures gained by 0.3%.

Markets had rocketed higher Wednesday following President Donald Trump's decisive and consequential victory in the US presidential election.

The massive rally pushed up the Dow by 1,507 points, or 3.57%, to close at a new record high. It's the first time the blue-chip index has gained more than 1,000 points in a single day since November 2022.

The S&P 500 and Nasdaq also reached new highs the morning Trump became president elect, with the S&P surging by 2.5% and the tech-heavy index closing 2.95% higher. The US dollar had its best day in two years, bitcoin topped $76,000 and Treasury yields also rose.

The Bank of England cut interest rates by a quarter point Thursday, after inflation in the United Kingdom fell to a three-year low in September.

The decision takes the UK's benchmark interest rate to 4.75% from 5%, where it had stood since August, after the first rate cut since the start of the pandemic.

"The disinflationary process has progressed well and indeed faster than we expected," Bank of England Governor Andrew Bailey told reporters.

"Both oil and gas prices have been significantly lower than market pricing suggested a year ago, but the downside news to inflation over the year has also reflected lower than expected food, core goods and services price inflation," he added.

UK inflation slowed to 1.7% in September, from 2.2% in August, falling below the Bank of England's 2% target to its lowest level since April 2021.

Bailey cautioned, however, that interest rates would need to "remain restrictive for sufficiently long" until risks to inflation, including strong wage growth and the price of some services, have "dissipated further."

"We need to ensure inflation stays low. So we will not cut rates too quickly or too much," the Bank of England said.

The Federal Reserve is expected to announce Thursday it is cutting interest rates, a decision that comes just two days after a divisive and historic US presidential election.

The central bank is widely expected to cut rates by a quarter point at the conclusion of its two-day policy meeting. The widely expected move comes as inflation remains on a downward trend.

Investors will be listening closely Thursday afternoon to comments from Fed Chair Jerome Powell at his traditional post-meeting press conference for any clues on the pace of future rate cuts, given the policies touted by former President Donald Trump, who is poised to return to the White House for a second term.

The Federal Reserve has eight scheduled two-day monetary policy meetings every year. One of those meetings takes place in November and, coincidentally, kicked off the Wednesday directly right after Election Day.

As Fed Chair Jerome Powell has previously vowed, officials don't take the political calendar into consideration when they make interest rate decisions. Rather, it's always about doing what's best for the economy, Powell's said.

Still, this meeting's proximity to Election Day has put the Fed in an uncomfortable position — whether Powell and his colleagues want to admit it or not.

Already, officials have been scrutinized for their decision to begin lowering rates at its last meeting before the election, which took place in September. The concern has been that the Fed could have inadvertently helped out Democrats by lowering borrowing costs for Americans, potentially leaving some feeling better about the state of the economy as they prepared to cast votes.

But even though this month's meeting comes after the election, it could still appear as though central bankers are giving an assist to one political party over another.

For instance, if the Fed scales down the size of its rate cut — or doesn't cut rates at all — it could, once again, give some people the impression that officials wanted to improve the election outcome for Democrats by getting in a larger-than-usual cut at the September meeting instead of waiting to do so at this month's meeting.