New York: After a confrontation with US President Donald Trump, the Federal Reserve cut its interest rate by a quarter per cent in a balancing act to
After a confrontation with US President Donald Trump, the Federal Reserve cut its interest rate by a quarter per cent in a balancing act to prevent inflation while staving off an economic slowdown.
Announcing the cut that brings the benchmark interest rate to the 4 per cent to 4.25 per cent range on Wednesday (local time), the Fed indicated that two more cuts could be on the way this year.
Although Chairman Jerome Powell had steadfastly held the rate since the last rate cut in December because he feared a resurgence of inflation, the slowing job growth wore him down.
He had resisted so far Trump’s repeated call to cut the rate and his threats to fire him.
Powell said at a news conference, “Ordinarily, when the labour market is weak, inflation is low. But right now, we face two-sided risks of weaker growth and higher inflation. There is no risk-free path.”
“This is a challenging situation,” he said.
