The Federal Reserve cut interest rates Wednesday for the first time since the COVID-19 pandemic, slashing half a percentage point to combat a slowdown in the labor market. The benchmark rate now sits between 4.75 percent and 5 percent.

With inflation reportedly softening, the central bank’s Federal Open Market Committee decided to lower its overnight borrowing rate by half a percentage point, or 50 basis points. The cut comes after a two-decade high for interest rates.

Inflation and the economy remain a sticking point for voters in the upcoming presidential election. Democrats, including President Joe Biden and Vice President Kamala Harris, have sought to distance themselves from the political liability of skyrocketing interest rates and inflation under Biden’s administration.

University of Iowa economics professor Anne Villamil said interest rates lowering is good news for borrowers.

“That’s going to make lots of people in the U.S. economy feel relieved, because these interest rates have been painful,” Villamil said. “If you wanted to buy a house, student loans are affected by the level of interest rates. If you want to buy a car, credit cards are affected by these rates. There is a sense of ‘we’re finally on the way down,’ and we’re on the way down at a rate of half a point.”

Villamil said the cut has a particular effect on young people and college students.

“People in college have a lot at stake,” she said. “You have your future in front of you. Many of you have student loans and so and so, these issues are actually very important for you. This was actually an important day for monetary policy. Clearly, it’s a turning point in what the Fed is doing.”

Inflation reached its highest level in decades with a peak of 9.1 percent in June 2022, falling to 3 percent in June 2023, and swooping further to 2.5 percent in August. The U.S. experienced its highest inflation to date in 1980, when it reached 14 percent.

Harris released a statement Wednesday and said she is not ready to declare “mission accomplished” on inflation.

“While this announcement is welcome news for Americans who have borne the brunt of high prices, my focus is on the work ahead to keep bringing prices down,” Harris said.

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Former President Donald Trump and fellow Republicans angled messaging toward the economy and inflation under Biden.

The Fed’s decision to cut interest rates suggests “the economy is now not good,” which Trump said at a town hall event in Flint, Michigan, Tuesday night. “Otherwise you wouldn’t be able to do it,” he said.

Trump frequently called for lower interest rates when he was in the Oval Office but didn’t comment on Tuesday as to whether he thought the Fed should reduce borrowing costs.

Aside from emergency reductions during the COVID-19 pandemic, the last time the committee cut interest rates by a half point was during the global financial crisis in 2008.

A Federal Reserve statement Wednesday said the decision comes as the committee has gained greater confidence that inflation is moving toward 2 percent, and judges that the risks to achieve its employment and inflation goals are roughly in balance.

The decision lowers borrowing rates to about 4.9 percent, a decrease from a more than two-decade high of about 5.33 percent. In an 11-1 vote, Michelle Bowman was the sole dissenting vote, as she preferred a quarter-point move that was expected by investors just a week ago.

Through a “dot plot,” the committee also indicated an additional half point reduction this year and expects four more cuts in 2025 and two in 2026.

“We concluded that this was the right thing for the economy and the people we serve,” Chair of the Federal Reserve Jerome Powell said about the central bank’s decision to decrease interest rates by a half point.