The Federal Reserve cut its benchmark interest rate by an unusually large half-point, a dramatic shift after more than two years of high rates that helped tame inflation but also made borrowing painfully expensive for consumers. The rate cut, the Fed's first in more than four years, reflects its new focus on bolstering the job market. Coming just weeks before the presidential election, the Fed's move also has the potential to scramble the economic landscape just as Americans prepare to vote. The policymakers signaled that they expect to cut their key rate by an additional half-point in their final two meetings this year, in November and December. And they envision four more rate cuts in 2025 and two in 2026.

When Jerome Powell delivered a high-profile speech last month, the Federal Reserve chair came the closest he ever had to declaring that the inflation surge that gripped the nation for three painful years was now essentially defeated. And not only that. The Fed's high interest rates, Powell said, had managed to achieve that goal without causing a recession and high unemployment. Yet most Americans are not in the same celebratory mood about the plummeting of inflation in the face of the high borrowing rates the Fed engineered. A majority of Americans still complain about elevated prices, given that the costs of such necessities as food, gas and housing remain far above where they were before the pandemic erupted in 2020.

America's employers added a strong 272,000 jobs in May, accelerating from April and a sign that companies are still confident enough in the economy to keep hiring despite persistently high interest rates. Last month's sizable job gain suggests that the economy is still growing steadily, propelled by consumer spending on travel, entertainment and other areas of the service sector. U.S. airports, for example, reported record traffic over the Memorial Day weekend. A healthy job market typically drives consumer spending, the economy's principal fuel. Though some recent signs had raised concerns about economic weakness, May's jobs report should help assuage those fears.