Sept. 18 (UPI) — For the second meeting in a row, the Federal Reserve ordered another quarter-point interest rate cut at the conclusion of its policy summit Wednesday.
The central bank reduced its benchmark rate to a range of 1.75 percent to 2 percent, citing “the implications of global developments for the economic outlook as well as muted inflation pressures.” This is likely a nod to the U.S.-China trade conflict.
The Fed said, though, there’s a strong labor market and solid consumer spending.
It was the Federal Open Market Committee’s second quarter-point reduction in a row. In July, the committee reduced rates for the first time in 11 years.
Federal Reserve Chairman Jerome Powell said in Switzerland this month that U.S. and global economies are growing at a moderate pace, but cautioned the Fed is monitoring “significant risks.”
“As we move forward, we’re going to continue to watch all of these factors, and all the geopolitical things that are happening, and we’re going to continue to act as appropriate to sustain this expansion,” he said.
Trump this week again called for a “big interest rate drop.” He has previously criticized Powell’s leadership and the Fed for not making rate cuts sooner.
“Jay Powell and the Federal Reserve Fail Again. No ‘guts,’ no sense, no vision! A terrible communicator!” Trump tweeted following the Fed’s decision Wednesday.
U.S. and Chinese negotiators have made some progress in the stalemate in recent weeks. Last week, Beijing delayed new tariffs on a number of U.S.-made agricultural products, like soybeans, for two weeks as a “gesture of good will.”
More discussions will be held in the coming weeks, Chinese and U.S. officials have said.
Tit-for-tat punitive tariffs between the two nations have escalated in recent months. The Trump administration is set to apply more taxes in December on Chinese products imported into the United States — on top of those that took effect this month.
“I would expect the growth forecasts for next year to be cut, and [forecasts for] unemployment to be raised,” analyst Ian Shepherdson, chief economist for Pantheon Macroeconomics, said. “Tariffs are a meaningful hit to real consumer incomes and business confidence has cratered.”