Written by Jeanna Smialek
The Federal Reserve cut interest rates by a quarter of a percentage point Wednesday, its second cut since late July, and suggested it was prepared to move aggressively if the U.S. economy showed additional signs of weakening.
For now, a growing number of Fed officials expect just one more cut this year, based on economic projections released following the meeting, in line with investor and economist expectations.
Fed Chair Jerome H. Powell, speaking at a news conference said that the U.S. economy remains strong and unemployment is low, but that “there are risks to this positive outlook.” If the economy weakens, a “more extensive” series of rate cuts would be appropriate, he said.
“Our eyes are open, we’re watching the situation,” Powell said at a news conference, explaining that the Fed will stop cutting rates to sustain the expansion “when we think we’ve done enough.”
“There may come a time when the economy weakens and we would have to cut more aggressively,” he said. “We don’t know.”
The Fed’s announcement Wednesday did little to appease President Donald Trump, who has pushed the central bank to cut interest rates to zero — or even into negative territory. The Fed’s policy interest rate is now set in a range of 1.75% to 2%, and not a single official sees it falling lower than 1.5% to 1.75% through the end of 2022.
“Jay Powell and the Federal Reserve Fail Again,” Trump said in a tweet shortly after the Fed’s announcement. “No ‘guts,’ no sense, no vision! A terrible communicator!”
Stocks, which were down slightly before the announcement, fell further afterward. Shortly before 2:30 p.m., the S&P 500 was down 0.7% and the Nasdaq was down 1%. The yield on the 10-year Treasury note was down on the day, at roughly 1.77%.
The Fed’s decision-making has been complicated by mixed economic signals. While risks cloud the horizon, economic data remain solid, creating a complicated backdrop. Businesses are hiring and consumers are spending, but Trump’s trade war and prospects of an unruly British withdrawal from the European Union have markets on edge. Inflation has been stuck below the Fed’s 2% target, giving officials room to lower rates without worrying about runaway price gains.