The US has cut its interest rates for the second time this year, by 0.25%.
Many had expected the Federal Reserve to cut interest rates by that amount and the Federal Reserve’s move reduces its benchmark rate to a range of 1.75% to 2%.
The decision to cut rates comes as the central bank faces uncertainties caused by President Donald Trump’s trade war with China, slower global growth and a drop in US manufacturing.
The Fed said in a statement that “business fixed investment and exports have weakened.”
The cut was approved on a 7-3 vote, with two officials wanting to keep rates unchanged and one arguing for a bigger 0.5% cut.
The vote marked the largest number of Federal Reserve dissents in three years.
The ongoing US-China trade war had increased the likelihood of a rate cute, although recent oil price spikes on the back of Saturday’s attacks on the Saudi oil facilities, added unforeseen complexity to the debate around rate cuts.
They were also considered an argument by some market watchers to leave the cost of borrowing at its current rate as those attacks triggered the biggest spike in oil prices in more than two decades.
The cut comes days after the Fed took the decision to support the overnight funding needs of banks, after their borrowing costs suddenly shot up on Monday.
The US’ central bank injected more than $125bn over the last two days into the overnight repurchase (repo) agreement markets that banks rely on for their short-term funding in the Fed’s first such intervention since the 2007-2009 financial
US interest rates were cut in August for the first time since 2008 by 0.25%, amid concerns about the global economy and weak inflation, leaving it benchmark rate in a range of 2% to 2.25%.