Federal Reserve cuts interest rates, and earns another blast from Trump - as it happened

Under pressure from Wall Street and the White House, the Federal Reserve lowered interest rates on Wednesday for a second straight meeting, but declined to signal if it would continue to drop rates in the future.

Citing the global economic outlook and “muted” inflationary pressures at home, the central bank decided to lower interest rates a quarter of a point to meet a target borrowing rate of 1.75% to 2%.

The cut was in line with the expectations of investors and economists, but the board showed it was not willing to schedule further cuts.

The decision showed Fed officials are split over where to set interest rates. Seven of 10 officials voted in favor of the cut, two opposed it and one argued for a larger half-point cut.

The board said: “This action supports the committee’s view that sustained expansion of economic activity, strong labor market conditions, and inflation near the committee’s symmetric 2% objective are the most likely outcomes, but uncertainties about this outlook remain.”

The analytical firm Capital Economics noted the Fed was split over rates and said its economic projections unchanged since July.

The breakdown of the split “suggests most Fed officials still see a rebound in economic growth as their base case scenario, which means any further rate cuts would be limited,” it wrote in a note to investors.

Financial markets largely welcomed the news as a buffer against risks from a global slowdown and uncertainty over Donald Trump’s trade policies.

But some analysts warned the cut could do more harm than good.

Kerstin Braun of the Stenn Group said: “Real capital growth and real economic activity are driven by long-term interest rates, which are functions of expected future inflation and investor confidence.”

With rates head toward zero, Braun added, “banks have no incentive to loan money, making credit actually tighter for companies that want to grow”.

The cut was immediately criticized by Trump, who last week said the Fed’s “boneheads’’ should reduce rates to zero or lower. Trump is counting on a strong economy fueled by cheap money to boost his reelection chances next year.

“Jay Powell and the Federal Reserve Fail Again. No “guts,” no sense, no vision! A terrible communicator!” Trump said in a tweet following the announcement...