Federal Reserve announces third consecutive rate cut
The Federal Reserve cut its benchmark interest rate Wednesday for the third consecutive time this year, by a quarter point, to between 1.5% and 1.75%. Chairman Jerome Powell hinted the central bank would hold off on further rate cuts.
Why it matters: The Fed has set out to shield the economy from risks, including the U.S.-China trade war. But the likely pause in rate cuts means officials think the economy has enough insulation for now.
Between the lines: The new benchmark rate could be the prevailing one for the foreseeable future.
- "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," Powell said at a press conference following the rate decision.
- The Fed also removed a phrase that's been associated with interest rate cuts from its closely watched policy statement — "act as appropriate to sustain the expansion" — which market-watchers interpreted to mean that the central bank could put rate cuts on pause.
What they're saying: The Fed noted in the statement that economic activity "has been rising at a moderate rate," job gains have been "solid, on average, in recent months, and the unemployment rate has remained low."
- Yes, but: While consumer spending is strong, "business fixed investment and exports remain weak," the central bank said.
- The Fed also noted that inflation remained below its 2% target rate.
Two Fed officials voted against the rate cut — down from the three dissenters in September.