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US Fed lowers key interest rate a third time

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AFP Washington
Last Updated : Oct 31 2019 | 12:45 AM IST

The US Federal Reserve cut its benchmark interest rate for the third straight time on Wednesday, but the central bank remains divided, with two of the 10 voting members dissenting.

And the Fed's policy-setting Federal Open Market Committee made a key change in the wording of the statement, which makes it less certain it will make another move in December.

The FOMC lowered the policy interest rate by 25 basis points to a target range of 1.5-1.75 percent, as expected, pulling back another of the four interest rate increases it implemented in 2018.

Fed Chairman Jerome Powell is due to hold a press conference at 1830 GMT to explain the central bank's rationale but he will face a difficult balancing act.

Policymakers believe continued growth and strong employment "are the most likely outcomes but uncertainties about this outlook remain," the FOMC said in the announcement.

But in a key edit to the prior statement, the Fed removed the pledge to "act as appropriate to sustain the expansion." Instead, it said, the committee "will continue to monitor the implications of incoming information for the economic outlook as it assesses the appropriate path of the target range for the federal funds rate."
As analysts scrutinize every phrase, they likely will read that as a leaving the door open to a pause in the easing cycle, which Powell has called a "mid-cycle adjustment."

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First Published: Oct 31 2019 | 12:45 AM IST

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