The Federal reserve system of the USA (performs the function of the Central Bank of the country) for the first time in 10 years lowered the benchmark interest rate by 25 basis points to 2-2,25% per annum.
Some analysts believe that this will help the growth of the American economy. Critics of the decision argue that the FED thus indulges US President Donald Trump, who has repeatedly demanded a reduction in interest rates.
Trump himself criticized the FED’s decision, calling it insufficient, and accused the head of the regulator Jerome Powell.
“Powell, as always, disappointed us, but at least he was done with the period of quantitative tightening, which should not have started — and there would be no inflation. In any case, we win, but that I will not get much support from the FED,” Trump tweeted.
The FED’s decision was expected, however, US stock indices on Wednesday evening began to decline.
Two members of the open market Committee of the US Federal reserve were against the rate cut. Eight out of ten were in favor, including FED Chairman Jerome Powell.
Jerome Powell himself said at a press conference that the decision to lower the discount rate was partly due to the global slowdown in economic growth. He also rejected the assumption that the FED succumbed to pressure from President Trump.
Powell did not deny that the regulator may lower the base interest rate once again this year (the next meeting is scheduled for September 17-18), but it is not about the long-term use of this tool.
“We are not talking about a long cycle of rate cuts. I also did not say that it would be only one rate cut. If we talk about the cycles of lowering the rate, they continue for a long time,” he said.
Powell added that according to the FED, lowering the rate by 25 basis points is enough to support the US economy.