The Trump administration has slashed federal interest rates as part of an effort to stabilize the economy following a rocky week on the financial markets.
The U.S. Federal Reserve cut interest rates to near-zero, the second time that the central bank has cut interest rates in as many weeks. The Federal Reserve also launched a $700 billion quantitative easing program to help prevent a further economic downturn sparked by the spread of coronavirus.
A statement said the bank will maintain its interest rates “until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals.”
- The Federal Reserve ended the week with yet another attempt to calm money markets and an announcement that more injections were on the way.
- The central bank pumped another $75 billion into financial markets Friday and announced a schedule for further repo operations.
- This week marked the first time the central bank had taken such steps since the global financial crisis 10 years ago.
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Washington (CNN Business)The Federal Reserve on Wednesday lowered interest rates for the first time since the Great Recession in 2008 to help stave off the possibility of an economic downturn.Policymakers led by Fed Chairman Jerome Powell voted 8-2 in favor of a small cut in the federal funds rate, and recommitted to their promise to “act as appropriate” to sustain the country’s longest economic expansion in history.
Stocks rallied Wednesday as Federal Reserve Chairman Jerome Powell testified about challenges the U.S. economy faces, adding to expectations that the central bank will cut interest rates later this month.
The Fed had hinted at such a cut in June.
Since then, “it appears that uncertainties around trade tensions and concerns about the strength of the global economy continue to weigh on the U.S. economic outlook,” Powell said in prepared testimony for the House Financial Services Committee. “Inflation pressures remain muted.”
The Federal Reserve is expected to leave its influential interest rate unchanged after the central bank’s top officials wrap up their meeting in Washington today, following a rocky start to the year in the financial markets that is forcing them to reevaluate their plans.
The Fed raised its benchmark interest rate in December from near zero to a range of 0.25 to 0.50 percent — the first increase in nearly a decade. The move amounted to a vote of confidence in the nation’s economic recovery, and officials at the time indicated they anticipated hiking four more times this year.