The US Federal Reserve cut interest rates again on Wednesday to help sustain a record-long economic expansion but signaled a higher bar to further reductions in borrowing costs.
“If the economy does turn down, then a more extensive sequence of rate cuts could be appropriate,” Fed Chair Jerome Powell said in a news conference after the Fed announced it had lowered its benchmark overnight lending rate by a quarter of a percentage point to a range of 1.75% to 2.00%, Reuters reported.
It was the second Fed rate cut this year.
“What we think we are facing here is a situation which can be addressed, which should be addressed, with moderate adjustments to the federal funds rate,” Powell said.
“We are going to be highly data-dependent ... We are not on a pre-set course, we are going to be making decisions meeting by meeting,” he stressed.
The central bank also widened the gap between the interest it pays banks on excess reserves and the top of its policy rate range.
According to Reuters, in a hint that the Fed may soon take bigger steps, Powell acknowledged that strains in funding markets had been bigger than expected, and he said the central bank may need to resume increases to the Fed’s balance sheet “earlier” than previously thought.
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