The US Federal Reserve has cut interest rate by a quarter percentage point for the second time since July due to potential global slowdown concerns.
Federal Reserve officials also expressed that they are open for another interest rate cut this year if there will be further weakening of the economy. This reinforces Chairman Jerome Powell's statement that policymakers will do anything necessary to prevent a recession.
During a press conference with reporters, Powell claimed that the decision to cut rates further is aimed at keeping the economy strong. The federal funds rate, which determines the cost of mortgages, credit cards and other borrowing, will now be between 1.75% and 2%.
Not all Fed officials were in favor of the decision. Boston Fed President Eric Rosengren and Kansas City Fed President Esther George argued that the US economy did not require any additional cuts while St. Louis Fed President James Bullard wanted a half percentage point cut.
US President Donald Trump also commented on the rate cut, tweetingg "Jay Powell and the Federal Reserve Fail Again. No 'guts,' no sense, no vision! A terrible communicator!"
Powell said that the Fed forecasts a strong economy and inflation to remain at the target level of around 2% but may enforce another small cut or two in the future. However, he does not expect the Fed to do so in the next months.
He argued "Generally Fed participants think these will be achieved with modest adjustments to the federal funds rate. If the economy does turn down, then a more extensive series of rate cuts could be appropriate. We don't see that. We don't expect that." He also rejected Trump's call for negative rates to match several foreign central banks in Europe.
He added "It's an usual situation. It's a challenging time, I admit it."
Fed officials are expecting moderate economic growth and a strong labor market for now.
