US Federal Reserve cuts rates for third time this year amid US-China trade war, but signals likely pause
- US central bank lowers overnight lending rate by quarter of percentage point to target range of between 1.50 per cent and 1.75 per cent
- Move seeks to keep US economy from slipping into recession as it weathers trade dispute
The US Federal Reserve on Wednesday cut interest rates for the third time this year to ensure the US economy weathers a global trade war without slipping into a recession, but signalled it will leave borrowing costs where they are unless things take a material turn for the worse.
“We believe that monetary policy is in a good place,” Fed Chair Jerome Powell said in a news conference after the US central bank announced its decision to cut its key overnight lending rate by a quarter of a percentage point to a target range of between 1.50 per cent and 1.75 per cent.
“We see the current stance of monetary policy as likely to remain appropriate as long as incoming information about the economy remains broadly consistent with our outlook,” he said.
Risks relating to global trade, as well as to the prospect that Britain would crash out of the European Union, have moved in a “positive direction” since the Fed’s last meeting, Powell said, adding that the US economy has remained resilient.
With the stimulative effects of the Fed’s rate cuts so far this year still working their way through the economy, only “a material reassessment of our outlook” could drive the central bank to cut rates further from here, Powell said.