Fed lowers interest rates for third time 
2019-11-01
THE US Federal Reserve cut its benchmark interest rate for the third straight time yesterday but is likely to hold off before providing more stimulus as it gauges economic risks.
The American economy has remained “resilient,” and monetary policy is now “in a good place,” Fed Chairman Jerome Powell said.
The Fed’s policy-setting Federal Open Market Committee lowered the policy interest rate by 25 basis points to a target range of 1.5-1.75 percent, as expected, pulling back another of the four interest rate increases it implemented in 2018.
“We took this step to help keep the US economy strong in the face of global developments, and to provide some insurance against ongoing risks,” Powell told reporters.
Added to a key change in the language of the statement issued by the policy-setting Federal Open Market Committee, the comments cement the view the Fed is for now unlikely to cut rates again in the final meeting of the year.
Pressed to explain under what conditions policymakers would consider another dose of stimulus as appropriate, Powell said, “if developments emerge that cause a material reassessment of our outlook, we would respond accordingly.”
He pointed to trade tensions and Brexit as factors crimping business investment and manufacturing but “overall we see the economy as having been resilient to the winds that have been blowing this year.”
In a key edit to the prior statement, the Fed removed the pledge to “act as appropriate to sustain the expansion.”
Analysts who scrutinize every phrase the Fed utters read that as a leaving the door open to a pause in the easing cycle.
“In other words, they think they have done enough for now and that further easings will be contingent on a material weakening in growth and/or inflation,” said Ian Shepherdson of Pantheon Macroeconomics.
Economists expected this move to help bolster a softening American economy.
But GDP in the July-September quarter was surprisingly solid, growing 1.9 percent, boosted by a strong housing sector and healthy consumer spending.
US hiring continues and unemployment is low, while inflation is creeping up to the Fed’s 2.0 percent target.
