The Federal Reserve cut rates by a quarter point Wednesday in a widely expected move aimed at staving off a slowing economy and fears of a recession.
It was the third rate cut in a row for the monetary policy committee, bringing the target for short-term interest rates to a range of 1.5% to 1.75%.
Two Fed officials, Kansas City Fed President Esther George and Boston Fed President Eric Rosengren, voted against the rate cut and would have maintained the target range set in September.
A statement released by the central bank following its meeting in Washington, D.C., did not include a line indicating that another cut in rates may be coming, a signal that the Fed may not make further decreases when it meets in December.
“Overall, we see the economy as having been resilient to the winds that have been blowing this year,” Federal Reserve Chairman Jerome Powell said during a press conference following the meeting.
Powell said the current stance of monetary policy is “appropriate and will remain so as long as the outlook is broadly in keeping with our expectations.” The central bank, he said, is not currently thinking about raising rates, though he acknowledged there will be times in the future where a hike will be appropriate.
In a deviation from his predecessors, Trump has pilloried the Fed and Powell in recent months for holding back economic growth with previous interest rate hikes and has called for the central bank to slash rates to zero or set negative rates in line with some European countries.
Last week, Trump tweeted the Fed would be “derelict in its duties” if it didn’t lower rates again Wednesday and said the central bank was “way too fast to raise, and way too slow to cut.” The president also called Powell and other bank officials “boneheads,” and has equated the Fed chairman, who he selected to replace Janet Yellen, to a “golfer who can’t putt.”
Despite Trump’s criticisms of the Fed, the central bank has lowered borrowing costs twice this year as it aims to sustain economic expansion, now in its 11th year. In September, the Fed lowered its interest rate target by a quarter percentage point, which followed a rate cut in July.
The Fed’s decision comes amid a weakening of global growth and slowdown in the U.S. economy, which has been battered by the president’s protracted trade war with China. American manufacturing has also taken a hit. A key index from the Institute for Supply Management reported factory activity in September slumped to a 10-year low, marking the second consecutive month of contraction.
The Commerce Department reported earlier Wednesday the U.S. economy grew at an annual rate of 1.9% in the third quarter of 2019, far below Trump’s target of 3% annual economic growth.
Trump, however, often lauds the state of the economy under his administration’s policies. Unemployment hit a new 50-year low this month, and trade tensions between the U.S. and China could be easing as the president announced the world’s two largest economies reached a phase one deal.
Trump signaled the agreement, which staved off a tariff hike and could be a boon to American farmers, could be signed next month. While the initial deal would give businesses some much-needed certainty, it’s unclear how far off a final agreement remains.
The ongoing trade war Powell said, was a principal risk to economic outlook, but has since moved in a positive direction with the initial agreement accepted by the U.S. and China.
If implemented, it could reduce trade tensions and uncertainty, which would “bode well for business confidence and perhaps activity over time,” Powell said.
Additionally, the risk of the United Kingdom’s exit from the European Union without a deal has also lessened, he said.
The Fed’s final meeting of the year is Dec. 10 and 11.
