The US Federal Reserve cut its benchmark interest rate for the second time this year on Wednesday but the policy committee is divided, with three of the 10 voting members dissenting.
The central bank also moved to ease concerns about a cash crunch on financial markets by adjusting its key policy tool to help pump more funds through the financial plumbing.
The Fed’s policy-setting Federal Open Market Committee lowered the policy interest rate by 25 basis points to a target range of 1.75 to 2.0 percent, as expected, and has now pulled back on half of the four interest rate increases in 2018.
“Although household spending has been rising at a strong pace, business fixed investment and exports have weakened,” the FOMC said in a statement.
And while officials continue to believe the most likely outcome is for the economy to continue to grow and inflation to gradually increase, “uncertainties about this outlook remain.”
Chairman Jerome Powell and other Fed officials frequently have cited the uncertainty generated by President Donald Trump’s trade war with China which is hanging over the economy.
The Fed also cut the interest it pays to banks on cash reserves above the required level by 30 basis points to 1.8 percent, in a bid to push more cash into markets.
A cash shortage in recent days prompted the New York Fed on Tuesday and Wednesday to pump $128 billion in funds into the short-term market as interest rates soared and threatened to break out of the Fed’s target range.
Powell is due to hold a press conference at 1830 GMT to explain the central bank’s rationale, and likely will be asked about the glitch in the key US financial plumbing.
But his job is complicated by the clear division on the committee: one member wanted an even steeper rate cut, while two others opposed cutting rates.
The Fed’s quarterly economic forecast also reflects the division among central bankers, as the median forecast calls for no further rate increases through the end of 2020 — holding at 1.9 percent down from 2.4 percent in the June forecasts.
That contradicts most private economists who expect the central bank will feel the need to provide at least one more reduction in interest rates in 2019.
But it reflects the fact that five members expect or prefer a rate hike, five see no change, and seven forecast or want to see another rate cut.
And that division comes even as the median forecasts for growth an unemployment are about steady, with inflation gradually rising to the Fed’s target of two percent.
The week Donald Trump’s presidency crashed and burned — and Republicans noticed
It feels as though every week during the Trump administration is a year and every year a decade. Every day there is a crisis or an outrage or a revelation that takes your breath away. But the underlying dynamics always seem to be the same no matter what. The press reports the story, the Democrats get outraged, the pundits analyze it, the president rages and then Fox and the Republicans all line up like a bunch of robots and salute smartly. Then we reset until the next crisis, outrage or revelation. It's an exhausting cycle that never seems to get us anywhere and it's bred a fatalistic response in many of us: "Nothing matters."
Turkish president threatens US over Trump’s insulting letter: ‘When the time comes necessary steps will be taken’
Turkish President Recep Tayyip Erdo?an on Friday warned the United States that it would pay a price for the letter send by President Donald Trump that warned him that history "will look upon you forever as the devil if good things don't happen" in northern Syria.
The letter, which also advised Erdo?an to not "be a tough guy" or "a fool," was widely ridiculed in the media for sounding childish. Erdo?an, however, said on Friday that he took the president's letter as a serious insult to his stature as a world leader.
As reported by the BBC's Jon Sopel, Erdo?an called out the president's letter for being out of line with standard diplomatic protocol, and he suggested his country would not forget how the president showed them such little respect.
‘We’re ready to vote’: Oversight Committee Dem claims Congress has the goods for impeachment
Appearing on CNN's "New Day," Democratic Rep. Ro Khanna (CA), who sits on the House Oversight Committee, said he and other Democrats have enough in hand to vote on the impeachment of President Donald Trump.
Speaking with host John Berman, Khanna was pressed on what he had learned behind closed doors from former and current officials working in Trump's administration, saying he couldn't divulge any more than has previously been released but that there was enough there to raise serious issues about Trump's continuing as president.
Pressed by host Berman whether lawmakers have enough to proceed with impeachment, the California Democrat didn't skip a beat and said yes.