Federal Reserve policy makers lowered their main interest rate for a second time this year while splitting over the need for further easing, caught between uncertainty over trade and global growth and a domestic economy that's holding up well.
“ Although household spending has been rising at a strong pace, business fixed investment and exports have weakened,’’ the Federal Open Market Committee said in a statement on Wednesday in Washington. Officials maintained their pledge to “act as appropriate to sustain the expansion.”
Chairman Jerome Powell, under relentless public pressure from President Donald Trump to slash rates, will hold a press conference at 2:30 p.m. New York time.
The benchmark rate was lowered by a quarter percentage point to a range of 1.75% to 2% “in light of the implications of global developments for the economic outlook as well as muted inflation pressures,’’ the committee said. The FOMC continued to characterize the labor market as “strong” with “solid” job gains.
Five officials wanted to keep rates unchanged, while five saw a quarter point as appropriate this year and seven wanted a half point.
The Fed Board also took a separate step to calm this week's strains in money markets and avert harm to the economy, lowering the interest rate on excess reserves to 1.8%. Earlier Wednesday the Fed injected $75 billion of liquidity to ease a crunch, and key rates pulled back from elevated levels.
Source : Bloomberg