The United States Federal Reserve (Fed) has cut interest rates by 25 basis points and flagged a further easing of borrowing costs for the rest of this year.
In a widely expected decision, the United States central bank reduced the target range for its benchmark lending rate to between 4% and 4.25% as it responded to a weak American jobs market.
The decision was supported by all members of the Fed, including all of President Donald Trump's appointees, except the newest member, Stephen Miran, who argued in favour of a 50 basis point reduction.
The other 11 voting members of the Federal Open Market Committee (FOMC), which sets rates in the world’s largest economy, supported the quarter-point cut to the Fed funds rate.
The Fed Board said economic growth had moderated in the first half of the year, jobs gains had slowed, unemployment had edged up but remained low, and inflation had moved up and remained somewhat elevated.
“Uncertainty about the economic outlook remains elevated. The Committee is attentive to the risks to both sides of its dual mandate and judges that downside risks to employment have risen,” it said in a press release.
Projections showed officials expected two more 25 basis point reductions at the remaining two meetings this year, but Powell told reporters the Fed was “not on a pre-set path”.
The Board said it would carefully assess incoming data, the evolving outlook and the balance of risks as it considered further changes to interest rates.
The Committee would be prepared to adjust monetary policy if risks emerged that could impede the attainment of its goals, based on assessments of labour market conditions, inflation pressures and expectations, and financial and international developments.
Concerned about the impact of U.S. tariffs on inflation, the Fed had been holding rates steady since December despite intense pressure from Trump to lower them further.
Miran joined the Fed on Tuesday, taking leave from his role as the head of the White House's Council of Economic Advisers.
The funds rate measures the cost of unsecured overnight loans between banks, and serves as the Federal Reserve’s primary tool for influencing short-term borrowing costs.
