The US Federal Reserve cut its key benchmark interest rate by a quarter point to a range of 2%-2.25% on Wednesday.
The Federal Open Market Committee (FOMC) cut interest rates for the first time in a decade, paused the tightening cycle which began at the end of 2015.
The interest rate on excess reserves (IOER) also decreased from 2.35 percent to 2.10 percent.
”Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. 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 to 2 to 2-1/4 percent. This action supports the Committee’s view that sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2 percent objective are the most likely outcomes, but uncertainties about this outlook remain, ” Fed said in a statement.
“The outlook for the U.S. economy remains favorable, and this action is designed to support that outlook,” he told a press conference Wednesday following the decision.“We’re thinking of it as essentially in the nature of a mid-cycle adjustment to policy.”
“It’s not the beginning of a long series of rate cuts,” he said, adding: “I didn’t say it’s just one” cut.