Federal Reserve Board Chair Jerome Powell speaks at a news conference following a two-day meeting of the Federal Open Market Committee, Wednesday in Washington. [PATRICK SEMANSKY/THE ASSOCIATED PRESS]
Federal Reserve Cuts Interest Rates by Quarter Point
WASHINGTON – The Fed cut rates for the second time this year and said it would keep doing what it deems necessary to sustain the U.S. economic expansion. Interest rate cuts have a direct impact on adjustable-rate mortgages and an indirect effect on fixed-rate loans.
In a statement accompanying the announcement, the Fed said the labor market “remains strong,” economic activity has been “rising at a moderate rate,” and household spending “has been rising at a strong pace.”
However, it also noted economic challenges, including “business fixed investment and exports have weakened.”
While Federal Reserve members often unanimously agree on rate changes, the vote this time was 7-3, the largest number of dissents in three years. Two Fed officials voted to keep rates unchanged, while one member argued for a larger half-point cut.
It’s not clear if the Fed will continue to cut rates later this year or not as some have predicted. While a number of Fed officials favor another rate cut soon, at least two officials expect a rate hike.
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