The Federal Open Market Committee cut interest rates by 25 basis points, setting a new target range between 1.5% and 1.75%. This consecutive third cut was largely expected by investors, analysts, and the broad financial market.
The Fed’s statement indicated a pause is ahead for interest rate easing, and the central bank also said the labor market “remains strong” and economic activity is “rising at a moderate rate.”
Speaking at a press conference, Fed Chair Jerome Powell said the current mid-cycle adjustment is likely at an end, and that the current monetary policy stance is “likely to remain appropriate.” Powell also emphasized that the current rate will be held as long as the economic outlook meets the Fed’s expectations.
Two FOMC voters, regional presidents Esther George of Kansas City and Eric Rosengren of Boston, dissented the decision; both maintained that the committee should have held rates at the previous benchmark.
The S&P 500 was trading at a new high this week ahead of today’s meeting. Stocks slipped slightly after the rate cut was announced but has since rebounded into the green; the Dow jumped over 100 points as of late afternoon trading.
Today’s rate cut announcement comes on the same day the Commerce Department said that U.S. GDP grew 1.9%, beating expectations but slightly down from the second quarter’s 2% pace. Investors are also awaiting key earnings reports from Apple AAPL, Facebook FB, and Starbucks SBUX Wednesday after the bell.
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