US Fed cuts interest rates once more, as uncertainties remain

US Fed cuts interest rates once more, as uncertainties remain

Following a two-day policy meeting, the central bank cut its benchmark interest rate to a target range of between 1.5% and 1.75%.

Treasuries weakened on the Fed's announcement, pushing the 10-year yield up slightly to 1.81 per cent from 1.80 per cent. Stocks were slightly higher and the US dollar gained. At the September meeting, the committee voted 7-3 for a rate cut. Less clear is where central bankers go from here amid signs the economy is slowing down.

The shift is "a clear sign that the Fed thinks it has done enough for now to achieve the mid-cycle adjustment in interest rates they believe is necessary to limit risks to the USA expansion from global developments", Brian Coulton, chief economist at Fitch Ratings, said.

Some worldwide tensions have eased since the Fed previously met in mid-September, which might suggest to some that further rate cuts are less necessary.

The language used in FOMC statements is highly scrutinized by investors, with some analysts even quantifying the sentiment of certain phrases to predict future policy decisions.

Stocks climbed into the close following the Fed's expected 25-basis point rate cut and comments from Chairman Powell that suggested rates likely would hold steady for a while.

Paul Ashworth, the chief U.S. economist at Capital Economics, said the Fed was still likely to cut at its next meeting despite signalling it was adopting a wait-and-see approach. The US and China reached a temporary trade truce earlier this month and are working on a phase-one agreement. Trump has contrasted the Fed's actions unfavorably with central banks in Europe and Japan, which like slashed their charges into antagonistic territory.

President Trump and Wall Street are looking for signals of how much more the Fed will lower rates heading into the presidential election.

The governors are nominated by the US president, confirmed by the Senate, and serve 14-year terms.

Americans gash attend on spending at retail outlets and restaurants last month, a worrisome tag because individual spending is the main source of business growth.

The tariffs and retaliatory tariffs between the United States and China, the world's two largest economies, have also reduced U.S. exports.

Personal consumption expenditures, which account for more than two thirds of the overall economy, grew at an annual rate of 2.9 percent in the third quarter, lower than the 4.6 percent growth pace in the second quarter.

The economy is in its 11th year of expansion, fueled by consumer spending and a solid if slightly weakened job market.

The housing market has also improved, after slumping in 2018, thanks in part to the Fed's rate cuts.

For consumers, lower interest rates - which affect borrowing costs, including auto loan rates and 30-year-fixed mortgage rates - can mean thousands of dollars in savings.

Sales of existing homes have climbed, as have those of new homes.

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