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

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

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Asked at a news conference how Trump’s election might affect the Fed’s decision-making, Chairman Jerome Powell said that “in the short term, the election will not have any impact on our (rate) decisions.”

But Trump’s election, beyond its economic consequences, has raised the specter of involvement by the White House in the Fed’s policy decisions. Trump has argued that as president he should have a voice in the central bank’s interest rate decisions. The Fed has long guarded its role as an independent agency that can make tough decisions about lending rates, free from political interference. But 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.

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Asked 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 office, said simply: “No.”

And Powell said that, in his opinion, Trump could not fire or demote him: That would “not be allowed under the law,” he said.

Thursday’s Fed rate cut lowered its benchmark interest rate to around 4.6%, down from a four-decade high of 5.3%. The Fed had kept interest rates that high for more than a year to combat the worst inflation streak in four decades. Annual inflation has since fallen from a peak of 9.1% in mid-2022 to a 3 1/2-year low of 2.4% in September.

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As its latest policy meeting concluded Thursday, the Fed issued a statement noting that “unemployment has risen but remains low,” and while inflation has fallen closer to the 2% target, it “remains somewhat elevated.”

After their rate cut in September – their first such move in more than four years – policymakers had expected to make another quarter of cuts in November and December and four more next year. But with the economy now mostly solid and Wall Street expecting faster growth, bigger budget deficits and higher inflation under a Trump presidency, further rate cuts may have become less likely. Interest rate cuts by the Fed usually lead over time to lower borrowing costs for consumers and businesses.

Powell on Thursday declined to be drawn on whether the Fed would go ahead with another rate cut in December or the four rate cuts its policymakers planned for 2025.

Diane Swonk, chief economist at accounting giant KPMG, said she believed Powell was reluctant to hint at the Fed’s next move because of the uncertainty caused by Trump’s election victory.

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“He’s not willing to get too far ahead of his skis, given how much can change,” she said. “In an environment where you don’t know how promises on the campaign trail translate into actual policies, you don’t want to go to the front.”

Still, Matthew Luzzetti, an economist at Deutsche Bank, said there are signs the Fed may announce fewer rate cuts next year than many economists expect. The labor market and economy look healthier than they did in September, when the Fed announced an outsized half-point rate cut.

“Nothing in the economic data,” Luzzetti said, “suggests that (the Fed) has any need to rush” to bring rates down significantly.”

On Thursday, Powell expressed confidence that inflation, despite some recent higher-than-expected readings, would continue to fall back to the Fed’s target.

“We feel that the story is very consistent with inflation continuing to fall on an uneven path over the coming years, and will be around 2%,” he said.

The economy clouds the picture by flashing conflicting signals, with steady growth but employment weakening. However, consumer spending has been healthy, fueling concerns that there is no need for the Fed to cut borrowing costs and that it could overstimulate the economy and even accelerate inflation.

Financial markets throw another curveball at the Fed: Investors have driven up government yields since the central bank cut interest rates in September. The result has been higher borrowing costs across the economy, reducing the benefits for consumers of the Fed’s half-point cut in its benchmark interest rate, which it announced after the September meeting.

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

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

The economy grew at a solid annual rate of just under 3% over the past six months, while consumer spending – fueled by buyers with higher incomes — rose sharply in the July-September quarter.

But companies have cut back on hiring, with many out of work struggling to find work. Powell has suggested that the Fed lower its key interest rate in part to bolster the labor market. If economic growth continues at a good clip and inflation rises again, however, the central bank will come under pressure to slow or stop its rate cuts.

Asked at his news conference about Americans feeling some relief from the pain of high prices that helped fuel Trump’s victory, Powell said:

“It takes a few years of real wage increases for people to feel better, and that’s what we’re trying to create, and I think we’re well on our way to creating that. Inflation has fallen far, the economy is still strong here, wages are rising, but at a sustainable level.

“I think what needs to happen is happening, and for the most part has happened, but it’s going to take time for people to regain their confidence and feel it.”