The Federal Reserve cut its benchmark rate by a quarter of a percentage on Wednesday in a bid to keep the decade-long U.S. economic expansion going while signaling it likely was done, for now.
It was the Fed’s third consecutive quarter-point cut as the central bank tries to bolster the economy while preserving ammunition that would be needed if the nation sinks into a recession.
The FOMC post-meeting statement dropped its prior pledge to “act as appropriate to sustain the expansion.” Instead, the committee promised to monitor data as it “assesses the appropriate path of the target range.” The Fed’s benchmark rate is now set in a range of 1.5% to 1.75%.
At the press conference following the decision, Fed Chairman Jerome Powell pointed to an economy growing at a moderate pace and unemployment near five-decade lows. While he cited some troubling signs, such as a manufacturing slowdown, he said it wasn’t enough to sway the “positive outlook” of the rate-setting Federal Open Market Committee.
“After cuts at the last three meetings, we feel that policy is well-position to support the outlook that I described,” he said. “We’re going to be watching all factors and if developments emerge that cause a material reassessment with that outlook, we would respond accordingly, but that’s what it would take: a material reassessment of our outlook.”
U.S. economic growth probably will slow to 2.1% in 2020, which would be the weakest pace since 2016, from 2.4% this year, the International Monetary Fund said in an Oct. 15 forecast. In 2018, the expansion rate hit a three-year high of 2.9% as changes to the federal tax rate that favored businesses provided a temporary boost.
In the last question of the press conference, a reporter asked Powell to comment on President Donald Trump’s tweet earlier in the day that simply said: “The Greatest Economy in American History!”
The president has been notably absent in the run-up to the Fed meeting. Before other meetings this year he tweeted multiple insults aimed at Powell and sometimes at the entire board, calling them “boneheads” and “clueless.”
This go-round, there was just one negative tweet, sent last week: “The Federal Reserve is derelict in its duties if it doesn’t lower the Rate and even, ideally, stimulate.”
Rather than responding to the president, Powell sidestepped the question.
“I’m going to maintain my longtime practice on not commenting on what any elected official might say,” Powell said before leaving the podium.