US central bank cuts rates for third time this year
WASHINGTON: The Federal Reserve cut interest rates for the third time this year to help sustain US growth despite a slowdown in other parts of the world, but signalled there would be no further reductions unless the economy takes a 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 took this step to help keep the economy strong in the face of global developments and to provide some insurance against ongoing risks,” he said. “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’s comments clash with President Donald Trump’s demands that the Fed cut rates even deeper to boost economic growth that ebbed to a 1.9 per cent annual rate in the third quarter, well below the 3 per cent level Trump pledged would flow from a round of tax cuts and other actions nearly two years ago.
But the Fed’s new stance also vouched for both the seeming durability of a US economic expansion that is now the longest on record.
In his news conference, Powell ticked off an extensive list of reasons why he feels the economy is doing well, and likely to continue to do so under the current stance of monetary policy - from robust consumer spending, strengthening home sales, and asset prices he considered healthy but not to a level of excess.
The S&P 500 index closed at another record high on Wednesday.