Federal Reserve officials cut interest rates by 25 basis points for the third time this year
in an effort to boost the economy but hinted they may hit pause on monetary policy easing for now.
The decision came at the conclusion of a two-day meeting of the Federal Open Market Committee (FOMC), the US central bank's monetary policymaking arm.
Eight of the 10 officials voted in favour of lowering rates, with Boston Fed President Eric Rosengren and Kansas City Fed President Esther George dissenting from the decision.
FOMC lowered its benchmark funds rate by 25 basis points to a range of 1.5% to 1.75%. The rate sets what banks charge each other for overnight lending but also determines lending rates for consumer loans, such as cars and credit cards. The federal funds rate is important because domestic and international rates, are linked directly to it or move closely with it.
Financial market participants had anticipated such a move, as fears mount that the
ongoing trade disputes and world economic slowdown will begin to drag on U.S. growth.
"The committee will continue to monitor the implications of incoming information for the economic outlook as it assesses the appropriate path of the target range for the federal funds rate," the Fed's accompanying statement said.
Fed Chairman Jerome Powell at a press conference Wednesday (Oct. 30) afternoon firmly indicated that the Fed would hold rates steady for the foreseeable future— unless conditions change.
“We see the current stance of monetary policy as likely to remain appropriate as long as incoming information about the state of the economy remains broadly consistent with our outlook”of moderate economic growth, a strong labour market and inflation growing at around 2%. "If that changes, the Fed will respond accordingly," Powell said.
The US stock market moved higher after the rate cut. The S&P 500 index closed at a new record — up 0.3 per cent to 3,046 points. The Dow Jones index advanced 0.4 per cent to 27,187, while the tech-rich Nasdaq finished trading 0.3 per cent higher at 8,304.
Earlier in the trading session, figures confirming a slight economic slowdown in the US kept investors cautious.
The Commerce Department estimated that the economy expanded at a rate of 1.9 percent in the third quarter, down from 2 per cent in the second quarter, but topped the annualised 1.6 percent that economists surveyed by Refinitiv were expected.
The US central bank is scheduled to hold its next monetary policy meeting on December 10-11, with CME Group's FedWatch tool currently indicating a 76.3 percent chance the Fed will leave rates unchanged.
What other newspaper say
Wall Street Journal
Fed Cuts Rate for Third Time This Year, Signals Pause
Fed lowers rates again but hints it may be done cutting in the near-term
New York Post
Fed cuts interest rates for third time this year to boost economy
Los Angeles Times
Fed officials cut interest rates for third time
Fed opts to wait on the US consumer with rate cut pause