The Latest: Fed says there will be no cycle of rate cuts
NEW YORK (AP) — The Latest on the Federal Reserve and its action related to a key interest rate (all times local):
Federal Reserve Chairman Jerome Powell was unable to say how many times the U.S. central bank might cut rates, though he said it would not be a long series of rate cuts.
Powell said the any future cuts would depend on incoming data and risks to the Fed’s outlook. But he added that there may be future cuts, just not many of them after the Fed cut rates for the first time in nearly 11 years.
“I didn’t say it’s just one or anything like that,” Powell said.
The Fed chairman said that a long series of rate cuts would indicate a weakening economy, whereas the Fed’s move on Wednesday was about sustaining growth.
Stocks are falling and bond yields are rising as investors anticipate that the interest rate cut they got from the Federal Reserve may not be followed up by many more.
The quarter-point cut the Fed announced Wednesday was widely expected. Investors were looking closely for hints about the Fed’s future plans for additional rate cuts.
Fed Chairman Jerome Powell said at a news conference that there could be more cuts but that the central bank was not intending to embark on a long cycle of interest rate cuts.
After initially having little reaction the Fed’s policy announcement at 2 p.m., stocks started sinking after Powell began speaking at about 2:30 p.m.
The Dow Jones Industrial Average was down 235 points, or 1%. It was down as much as 478 earlier.
The Federal Reserve is cutting its key interest rate for the first time in a decade to try to counter threats ranging from uncertainties caused by President Donald Trump’s trade wars to chronically low inflation and a dim global outlook.
The central bank cut its benchmark rate — which affects many loans for households and businesses — by a quarter-point to a range of 2% to 2.25%. It’s the first rate cut since December 2008 during the depths of the Great Recession, when the Fed slashed its rate to a record low near zero and kept it there until 2015.
The economy is far healthier now despite risks to what’s become the longest expansion on record.
The Fed repeats a pledge to “act as appropriate to sustain the expansion,” wording that markets have seen as a signal for possible future rate cuts.
Global markets are in a holding pattern ahead of a decision by the U.S. Federal Reserve, which is poised to cut its key interest rate.
The Fed on Wednesday is expected to cut that rate to counter what it sees as threats to the U.S. economy ranging from uncertainties caused by President Donald Trump’s trade conflicts to persistently subpar inflation to a darkened global outlook.
It will be the Fed’s first rate cut since December 2008 in the depths of the Great Recession.
Most analysts expect the Fed to announce a quarter-point cut in its benchmark short-term rate. That rate, which affects many consumer and business loans, is now in a range of 2.25% to 2.5% after nine quarter-point rates increases from December 2015 to December 2018.