US Federal Reserve cuts interest rates by quarter point and signals potential for more
- Central bankers vote to lower target range for benchmark rate to 2 per cent to 2.25 per cent
- Reduction is first since 2008 financial crisis, and may be followed by another cut this year to insulate US economic expansion from slowing global growth
The Federal Reserve reduced interest rates for the first time since the 2008 financial crisis and hinted it may cut again this year to insulate the record-long US economic expansion from slowing global growth.
Central bankers voted, with two officials dissenting, to lower the target range for the benchmark rate by a quarter-percentage point to 2 per cent to 2.25 per cent. The shift was predicted by most investors and economists, yet will disappoint US President Donald Trump, who tweeted on Tuesday he wanted a “large cut”.
“In light of the implications of global developments for the economic outlook as well as muted inflation pressures, the committee decided to lower” rates, the Federal Open Market Committee, led by Jerome Powell, said in a statement following a two-day meeting in Washington. It also noted that “uncertainties” about the economic outlook remain.
Officials also stopped shrinking the Fed’s balance sheet effective August 1, ending a process that very modestly tightens monetary policy and was previously expected to come to a close at the end of September.
Policymakers appeared open to another cut as early as September when they next convene, while sticking with wording in their statement that preserves their options.