Fed Cuts Rates Again, With a Big 'But'

The Federal Reserve cut its benchmark interest rate Wednesday for the third time this year to try to sustain the economic expansion in the face of global threats, the AP reports. But it hinted that it won't likely cut again this year. The Fed's move reduces the short-term rate it controls—which influences many consumer and business loans—to a range between 1.5% and 1.75%. A statement the Fed released after its latest policy meeting removed a key phrase that it has used since June to indicate a future rate cut is likely. This could mean that Fed officials will prefer to leave rates alone while they assess how the economy fares in the months ahead. The immediate reaction in the stock and bond markets was muted as traders awaited a news conference from Chairman Jerome Powell.

In a new statement, the Fed made few changes to its description of the economy, which it said was rising at "a moderate rate." It noted that job gains have been solid and pointed to strength in consumer spending. But it also pointed out that business investment and exports "remain weak." The economy is in its 11th year of expansion, fueled by consumer spending and a solid if slightly weakened job market. By cutting rates, the Fed has tried to counter uncertainties heightened by President Trump's trade conflicts, a weaker global economy, and a decline in US manufacturing. The third rate cut of the year has partly reversed the four hikes that the Fed made last year in response to a strengthening economy.