U.S. Federal Reserve on Wednesday lowered interest rates by 25 basis points amid a further slowdown in U.S. economic growth, the central bank’s third rate cut this year.
The Federal Open Market Committee (FOMC), the Fed’s rate-setting body, trimmed the target for the federal funds rate to a range of 1.5 percent to 1.75 percent after concluding its two-day policy meeting, largely in line with market expectation.
“Although household spending has been rising at a strong pace, business fixed investment and exports remain weak,” the FOMC said in a statement. “On a 12-month basis, overall inflation and inflation for items other than food and energy are running below 2 percent.”
The U.S. economy expanded at an annual rate of 1.9 percent in the third quarter of the year, slightly lower than the 2-percent growth rate in the second quarter, the Commerce Department reported on Wednesday. This marks a further deceleration from the first quarter’s 3.1 percent growth rate.
Two members of the 10-person committee voted against this action. Federal Reserve Bank of Boston President Eric Rosengren, and Kansas City Fed President Esther George “preferred” to maintain the target range for the federal funds rate at the previous level. |