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U.S. Federal Reserve cuts rates for first time in 10 years Updated: 2019-08-01 07:02:51 KST

The U.S. Federal Reserve lowered its interest rates on Wednesday for the first time since the 2008 global financial crisis.
Led by Fed Chairman Jerome Powell, policymakers voted eight to two in favor of a small cut.
The cut, widely forecast by analysts, affects the cost of borrowing for credit cards and mortgages in the U.S., and will hover between the two-percent to two-and-a-quarter percent range.

"We decided today to lower the target for the federal funds rate by a quarter of a percentage point to a range of 2% to 2 1/4 percent. The outlook for the U.S. economy remains favorable and this action is designed to support that outlook point."

President Trump has long criticized the Fed and its current chair, saying they're not doing enough to boost the American economy.
However, according to Powell, the decision to cut rates was not affected by Trump's constant criticisms, but instead done in the hope it boosts the U.S. economy in the face of a global economic slowdown.

"Through the course of the year, weak global growth, trade policy uncertainty and muted inflation have prompted the FOMC [Federal Open Market Committee] to adjust its assessment of the appropriate path of interest rates. The committee moved from expecting rate increases this year to a patient stance about any changes and then to today's action."

Major U.S. stock indexes plunged after the announcement.
Watchers say Wall Street had priced in a more aggressive rate cut of half-a-percentage point rather than the quarter-point cut that wound up happening.
The smaller cut prompted a stock sell-off and pushed bond yields higher.
However, with the Fed also pledging to "act as appropriate to sustain the expansion", market analysts believe further rate cuts are in the pipeline.
Lee Seung-jae, Arirang News.

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