Federal Reserve officials reduced interest rates by a quarter-percentage point for the third time this year and hinted they may now put monetary policy on hold, for one meeting at least.
The Federal Open Market Committee altered language in its statement following the two-day meeting Wednesday, dropping its pledge to “act as appropriate to sustain the expansion,” while adding a promise to monitor data as it “assesses the appropriate path of the target range for the federal funds rate.”
As with the September statement, the FOMC cited the implications of global developments in deciding to lower the target range for the central bank’s benchmark rate to 1.5% to 1.75%.
Treasuries weakened on the Fed’s announcement, pushing the 10-year yield up briefly to 1.81% from 1.80%. Stocks were little changed and the U.S. dollar gained. Traders also pared wagers on a fourth consecutive rate cut in December.
The tweaks to the statement suggest policy makers are prepared to leave rates on hold for some time and assess the impact on the economy of their reductions over the past three meetings. Chairman Jerome Powell will hold a news conference at 2:30 p.m. with reporters likely to press him to explain the changes.
Powell has said that he didn’t expect an extended series of rate reductions, while describing easing as an effort to provide insurance for an aging economic expansion imperiled by trade tensions and faltering global growth. He hasn’t said, however, how much insurance is enough.
Source : Bloomberg