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BUSINESS Thursday 31 OcTOber 2019
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Fed cuts rates a 3rd time this year but signals likely pause

WASHINGTON (AP) — The for the Fed because its pre-
Federal Reserve cut its ferred inflation gauge has
benchmark interest rate been stuck below its 2%
Wednesday for the third target for most of the past
time this year to try to sus- seven years.
tain the economic expan- In the meantime, Trump,
sion in the face of global via Twitter, has renewed
threats. But it hinted that it his attacks on the Fed for
won't likely cut again this not lowering its benchmark
year. rate closer to zero. The
The Fed's move reduces president has contrasted
the short-term rate it con- the Fed's actions unfavor-
trols — which influences ably with central banks in
many consumer and busi- Europe and Japan, which
ness loans — to a range be- have slashed their rates into
tween 1.5% and 1.75%. negative territory. Though
A statement the Fed re- Trump has argued that this
leased after its latest policy puts the United States at a
meeting removed a key competitive disadvantage,
phrase that it has used most economists regard
since June to indicate a negative rates as a sign of
future rate cut is likely. This weakness.
could mean that Fed of- Some international tensions
ficials will prefer to leave In this Oct. 4, 2019, file photo Federal Reserve Chairman Jerome Powell listens to feedback during have eased since the Fed
rates alone while they as- a panel at the Federal Reserve Board Building in Washington. previously met in mid-Sep-
sess how the economy Associated Press tember, which might sug-
fares in the months ahead. gest to some that further
The immediate reaction in changes to the Fed's de- by consumer spending and Powell has said that the rate cuts are less necessary.
the stock and bond mar- scription of the economy, a solid if slightly weakened central bank's rate reduc- The U.S. and China reached
kets was muted as traders which it said was rising at job market. By cutting rates, tions are intended as a kind a temporary trade truce
awaited a news confer- "a moderate rate." It not- the Fed has tried to coun- of insurance against threats earlier this month and are
ence from Chairman Je- ed that job gains have ter uncertainties height- to the economy. Powell working on a preliminary
rome Powell. been solid and pointed ened by President Donald has pointed to similar rate agreement that could be
The phrase the Fed to strength in consumer Trump's trade conflicts, a cuts in 1995 and 1998 as signed soon by Trump and
dropped Wednesday from spending. But it also point- weaker global economy precedents; in both those President Xi Jinping. It's not
its policy statement had ed out that business invest- and a decline in U.S. manu- cases, the Fed cut rates clear, though, how mean-
said it would "act as ap- ment and exports "remain facturing. three times. He and most ingful such an agreement
propriate to sustain the ex- weak." The third rate cut of the other Fed officials credit might be, and Trump hasn't
pansion." This was its signal Two of the Fed's policymak- year has partly reversed their rate cuts with lowering dropped his threat to im-
that it expected to con- ers dissented from the deci- the four hikes that the Fed mortgage rates, boosting pose new tariffs on Chinese
tinue easing credit to aid sion: Boston Fed President made last year in response home sales and generally goods on Dec. 15.
the economy. In its new Eric Rosengren and Kansas to a strengthening econo- keeping the economy on Another source of global
statement, the Fed said in- City Fed President Esther my. That was before rising track. tension has been Brexit,
stead that it will review the George said they preferred global risks led the Fed to The Fed is also weighing the which has also eased.
latest economic data as "it to leave rates alone. Both change course and begin consequences of a decline The European Union has
assesses the appropriate have dissented from all easing credit. Lower rates in expectations for inflation. agreed to delay the dead-
path" for its benchmark in- three rate cuts this year. are intended to encour- Lower inflation expecta- line for Britain's exit from the
terest rate. The economy is in its 11th age more borrowing and tions can be self-fulfilling. trade bloc from Oct. 31 to
The statement made few year of expansion, fueled spending. This can pose a problem Jan. 31. q