Federal Reserve chairman Jerome Powell announced an interest rate cut of 0.25% Wednesday, confirming analysts’ expectations of a cut amid softening inflation, a strong consumer economy and an uncertain international trade outlook.
Fed Cuts Interest Rates For 1st Time Since 2008
✅ According to a Federal Reserve press release, “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.”
✅ The move should mean the cost of borrowing for mortgages, auto loans and credit cards will decrease and encourage consumers to spend.
✅ President Trump has repeatedly demanded a rate cut—as recently as Monday— and also complained about Powell’s performance. Trump has considered firing Powell, a risky move that could cause market instability.
✅ The most recent interest rate hike occurred in December 2018, with four total implemented that year.
✅ Powell hinted on July 10 a rate cut would happen due to “uncertainties around trade tensions and concerns about the strength of the global economy,” which helped spur the S&P 500 to a record high.
✅ It was suggested before Wednesday’s announcement that a rate cut would be enacted by the Fed to appease Trump, instead of doing what was best for the economy.
