On Wednesday, the Federal Reserve cut its key interest rate by one-quarter of a percentage point, marking the first such reduction in 11 years. The announcement came at the conclusion of a two-day meeting in Washington of the Federal Open Market Committee, the central bank’s monetary policymaking arm.
Fed Chairman Jerome Powell has acknowledged the strength of the nation’s economy; such as the current 10-year economic expansion as the longest on record, unemployment stands at a near-historic low of 3.7 percent, and the stock market continues to earn record highs. However, Wednesday’s move is an attempt to guard the economy against increasing geopolitical tensions, the potential impact of Brexit, and fallout from President Donald Trump’s protracted trade war with China.
The last time the central bank slashed the rate was in December 2008, during the Great Recession. Rates remained at levels near zero for seven years before the Fed began a series of increases, beginning in December 2015.