Stephen McNeice
Stephen McNeice

19.57 31 Jul 2019


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The US Federal Reserve - the country's central bank - has cut interest rates for the first time in a decade.

It's in a bid to help the US economy avoid another downturn amid concerns over international trade disputes and 'weak global growth'.

Officials say the US economy remains strong, but they're taking action as part of efforts to ensure that remains the case.

The move involves a quarter-point interest rate cut, and is the first such move since the financial crisis in 2008 when the rate was dramatically cut to almost zero.

It will now sit between 2% and 2.25%.

CNN reports that the rates impact the cost of borrowing for credit cards and mortgages.

The Fed's interest rate - or federal funds rate - is considered a significant benchmark in financial markets.

In a statement, the Federal Open Market Committee - which sets the rates during their regular meetings - noted concerns about the rate of inflation, noting that for items other than food and energy it was below their target.

While the move to cut rates was backed by a majority of members, it was not unanimous - with two members of the committee voting to retain the previous interest rate.

The decision also comes amid Donald Trump's ongoing trade war with China, which has created economic uncertainty in the US.

Federal Reserve Board chair Jerome Powell said: "The outlook for the US economy remains favourable, and this action is designed to support that outlook.

"It is intended to ensure against downside risks from weak global growth and trade policy uncertainty; to help offset the effects these factors are currently having on the economy; and to promote a faster return of inflation to our symmetric 2% objective."

The US president has been one of the most vocal supporters for a 'deep' interest rate cut - although today's move will be considered a modest intervention from the US central bank.

Main image: Federal Reserve Chairman Jerome Powell. Picture by: Liu Jie/Xinhua News Agency/PA Images

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