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7/31/2019, 8:00 PM (Source: TeleTrader)
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Fed cuts rates, ends balance sheet runoff

The United States Federal Reserve said on Wednesday that it decided to lower its benchmark for borrowing costs, ending the hiking phase which started in December 2015. The target fed funds range was cut to between 2% and 2.25% or by 0.25 percentage points on both ends. The previous move downward was in December 2008.

Furthermore, rate-setters cut short their balance sheet runoff program or so-called quantitative tightening by two months, ending it next month. Also, the interest rate on excess reserves and the discount rate were both slashed by 0.25 points 2.1% and 2.75%, respectively.

The Federal Open Market Committee "will act as appropriate to sustain expansion," the statement adds, mirroring the previous update. The central bankers pointed to "muted inflationary pressures" and "the implications of global developments." Economic growth should be sustained, they acknowledged, but still insisted on the persistent "uncertainties" in the outlook.

An important dissent came out in the open as out of ten voting members, Boston Fed President Eric Rosengren and Kansas City Fed President Esther George didn't support the change.

Breaking the News / IT