The Federal Reserve slashed interest rates Wednesday for the first time since the 2008 economic crisis, in a long-expected move aimed at preserving the record economic expansion in the U.S. amid concerns that it may be nearing its end.
The Federal Open Market Committee cut its benchmark interest rate a quarter-point to 2.25 percent, despite noting “moderate” growth and a “strong” labor market. The cut is intended to provide some insulation against slowing economic growth globally as well as escalating trade tensions between the Trump administration and China.
“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,” the Committee said in a policy statement. it left the door open to additional rate cuts, though Fed chair Jerome Powell cautioned that the modest cut is not the “beginning of a lengthy cutting cycle,” emphasizing that the economic risks it’s meant to mitigate are international rather than domestic.
“There is really nothing in the U.S. economy that presents a prominent near-term threat,” Powell said. “Downside risks are really coming from abroad.”
Officials also announced that the Fed will halt sales of its $3.8 trillion in Treasury bonds and other assets bought during the financial crisis in August, several months sooner than expected.