US interest rates cut for first time in more than a decade

New rates meant to calm uncertainty over Donald Trump's trade conflicts, analysts say

Chair of Federal Reserve Jerome Powell announces interest rate cut of 0.25%

The US Federal Reserve has cut interest rates for the first time in more than a decade in an effort to extend the country’s historic economic expansion beginning under former President Barack Obama.

The Federal Reserve announced the changes on Wednesday, saying it would lower targets for key federal funds by 0.25 per cent to a range of 2 per cent to 2.25 per cent

However Fed Chair Jerome Powell on Tuesday that said the move might not be the start of a lengthy campaign to shore up the economy against risks including global weakness.

"Let me be clear – it's not the beginning of a long series of rate cuts," Powell said in a news conference after the Fed released its latest policy statement. At the same time, he said, "I didn’t say it’s just one rate cut."

Mr Powell cited signs of a global slowdown, simmering U.S. trade tensions and a desire to boost too-low inflation in explaining the central bank's decision.

The board was previously considering raising rates in 2019.

U.S. President Donald Trump, who has repeatedly attacked the Fed's policy stance under Powell and demanded that it push through big rate cuts, said on Twitter the Fed chief "let us down" by not telegraphing that an aggressive easing was coming.

It’s the first rate cut since December 2008 during the depths of the Great Recession, when the Fed slashed its rate to a record low near zero and kept it there until 2015.

The economy is far healthier now despite risks to what’s become the longest expansion on record.

The Fed repeats a pledge to “act as appropriate to sustain the expansion,” wording that markets have seen as a signal for possible future rate cuts.

The new rates are also reportedly meant to combat extensive uncertainty caused by Donald Trump’s ongoing trade war with China and tariffs threats against several other countries.

Stock indexes fell on Wednesday after the widely-expected announcement.

Some on Wall Street had believed the Fed might act more aggressively in cutting rates by half a percentage point rather than the quarter-point cut it wound up making.

The smaller cut prompted investors to send stocks lower and bond yields higher.

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The Fed's repeated vow to "sustain the expansion," was widely-interpreted as a signal for possible future rate cuts.

Additional reporting by AP

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