The Fed is not done with cuts

The Federal Reserve Board building on Constitution Avenue in Washington. Despite what the Fed views to be a favourable outlook for the US economy, it is cautious of the growth risks posed by global trade uncertainties.
The Federal Reserve Board building on Constitution Avenue in Washington. Despite what the Fed views to be a favourable outlook for the US economy, it is cautious of the growth risks posed by global trade uncertainties.PHOTO: REUTERS

Two areas to watch in coming months - low inflation, weakness in business investments

For the first time in a decade, the United States Federal Reserve cut interest rates on Wednesday by lowering the US benchmark rate by 25 basis points.

It also decided to end quantitative tightening, or the process of reducing the amount of bonds held on its balance sheet, this month - two months earlier than planned. These moves will lower borrowing costs and support financial conditions, which will help sustain the economic expansion and boost inflation.

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A version of this article appeared in the print edition of The Sunday Times on August 04, 2019, with the headline 'The Fed is not done with cuts'. Print Edition | Subscribe