The Federal Reserve cut interest rates on Wednesday for the third time since July, as fears mount that the global economic slowdown will begin to drag on U.S. growth.
The decision came at the conclusion of a two-day meeting of the Federal Open Market Committee, the central bank’s monetary policymaking arm.
While Wall Street had anticipated such a move, market observers will still dissect every sentence from Fed Chairman Jerome Powell’s press conference later in the afternoon for any sign that more cuts are on the way.
“Words matter,” Nela Richardson, an investment strategist with Edward Jones, told Reuters. “The Fed’s toolbox isn’t just increasing or lowering the federal funds rate — it’s also how they communicate with markets.”
President Donald Trump has repeatedly pushed for lower rates, and has even promoted a negative rate, which is traditionally only implemented in times of severe economic distress. But despite a disappointing jobs number last month, the domestic economy remains strong. Unemployment is at a near-record low of 3.5 percent, the S&P 500 index hit a record high this week due to soaring corporate earnings, and consumer spending — which drives 75 percent of the economy — remains resilient in the face of weakening business investment and diminishing optimism.
The new federal funds rate, which determines lending rates for consumer loans such as cars and credit cards, now stands at 1.5 to 1.75 percent, a reduction of one-quarter of a percentage point.
