the Federal Reserve finally cut its benchmark rate by a quarter-point to 2 percent and 2.25 percent for the first time in a decade - Photo by Federal Reserves Office

JAKARTA (TheInsiderStories) – After get pressured from United States (US) President Donald Trump, the Federal Reserve (Fed) finally cut its benchmark rate by a quarter-point to 2 percent and 2.25 percent. It was the US central bank’s first rate cut in a decade.

In an official statement, chairman the Fed Jerome Powell also said that the central bank also left the door open for future cuts, saying it would act accordingly to maintain expansion because it continued to evaluate incoming data. The FOMC hinted to cut the FFR twice in this year.

In a two-days meeting, the Federal Open Market Committee (FOMC) rated, there was an implication of global developments for the economic outlook and muted inflationary pressures. The committee calls the current growth conditions “moderate” and the labor market “strong,” but decides to keep loosening policy.

This action supports the Committee’ view that continued expansion of economic activity, strong labor market conditions, and inflation near the symmetrical goals of the 2 percent. It said, the information received since the FOMC met in June indicates that the labor market remains strong and that economic activity has been rising at a moderate rate. Job gains have been solid, on average, in recent months, and the unemployment rate has remained low.

Although growth of household spending has picked up from earlier in the year, growth of business fixed investment has been soft. On a 12-month basis, overall inflation for items other than food and energy are running below 2 percent. Market-based measures of inflation compensation remain low, survey-based measures of longer-term inflation expectations are little changed.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. As board of governors contemplates the future path of the target range for the federal funds rate, it will continue to monitor the implications of incoming information for the economic outlook.

In determining the timing and size of future adjustments to the target range for the federal funds rate (FFR), the FOMC will assess realized and expected economic conditions relative to its maximum employment objective and its symmetric 2 percent inflation objective.

This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. The Committee will conclude the reduction of its aggregate securities holdings in the System Open Market Account in August, two months earlier than previously indicated.

by Linda Silaen, Email: linda.silaen@theinsiderstories.com