Federal Reserve Cuts Interest Rates For The Second Time Since July

By on September 23, 2019 0 706Views

Last week, the Federal Reserve cut interest rates for the second time since July as worries have grew about a potential global clash.

They also left the possibility open that another cut could happen this year in order to avoid recession.

The federal funds rate, which controls the cost of mortgages, credit cards and other borrowing, will now linger between 1.75% and 2%.

Boston Fed President Eric Rosengren and Kansas City Fed President Esther George believe that the economy is not in need of an extra boost from rate cuts. On the other side, St. Louis Fed President James Bullard favored a bigger cut.

The Dow fell over 150 points after the announcement.

Even though we are experiencing a 50-year low in unemployment, people still continue to make big purchases. Trade negotiations between the United States and China have slowed manufacturing and business investing.

There are two more meetings remaining in 2019. Seven of the 17 Fed officials see the possibility of at least one more rate cut, which would total three in all. Five officials would prefer to stop cuts for the remainder of 2019. They believe inflation will be close to their 2% target, the level it considers healthy for the economy.

The Federal Reserve has agreed to lower the rate banks pay on excess reserves to increase liquidity in other short-term lending markets as well.