As expected, the Federal Reserve announced today that it would cut interest rates by a quarter point. The cut came following a two-day meeting of the Federal Open Market Committee (FOMC), the central bank’s governing body. This marks the third time this year the Fed has slashed rates, following cuts in July and September.
“Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. In light of the implications of global developments for the economic outlook as well as muted inflation pressures, the Committee decided to lower the target range for the federal funds rate to 1-1/2 to 1-3/4 percent,” the FOMC said in a statement. “This action supports the Committee’s view that sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2 percent objective are the most likely outcomes, but uncertainties about this outlook remain. The Committee will continue to monitor the implications of incoming information for the economic outlook as it assesses the appropriate path of the target range for the federal funds rate.”
The cut came as no surprise to market watchers, with odds that the Fed would cut rates placed at 97% Tuesday, according to a Bloomberg report. However, many economists expect this to be the last rate cut for a while.
The last time the Fed cut rates three times while the economy was growing was in 1998, according to Bloomberg.