On Wednesday, since July, the Federal Reserve cut interest rates by a quarter percentage point for the second time as concerns grow about a potential worldwide slowdown.
The door is left open by the officials for one more rate cut this year if the economic slowdown further, supporting the message by Fed Chairman Jerome Powell that policymakers will do whatever is essential to prevent a recession.
During a press conference with reporters, Powell said, ‘To keep the economy strong we took this step.’
The federal funds rate, which controls the credit cards, price of mortgages and other borrowings, will now hover between 1.75% and 2%.
There was a disagreement over the decision, with 3 officials dissenting. Two- Kansas City Fed President Esther George and Boston Fed President Eric Rosengren- have both voiced concerns that the economy of the United States in need of an additional boost from rate cuts. But James Bullard, St. Louis Fed President favored a deeper, half-point cut.
Investors sold off stocks, hoping for a deeper cut. The Dow (INDU) fell more than 150 points after the Fed’s announcement.
Donald Trump, who has wrecked with presidential precedent and openly pressured the Fed for months over rates, right away weighed in with a bad review.
Powell on Wednesday said that the decision of New York Fed to spend over $125 billion in the suddenly borrowing markets ensured crucial bank lending is running efficiently. Moreover, the Fed agreed to lesser the rate banks pay on surplus reserves to raise liquidity in other short-term lending markets.
