The Federal Reserve rolls back interest rates a quarter-of-one-percent for a second time this year, as insurance against weak global growth and ongoing trade talks with China.
Despite the rate cut, Fed Chairman Jerome Powell stressed the U.S. economy remains strong.
“Participation in the labor force by people in their prime working years has been increasing, and wages have been rising, particularly for lower-paying jobs,” he said. “People who live and work in low and middle-income communities tell us that many who have struggled to find work are now getting opportunities to add new and better chapters to their lives.”
Pat Shinn, president of Heritage Asset Advisers, says the average consumer won't really notice the rate cut.
“It's going to affect things like money rates, if you've got money in a money fund, why the rate you get a couple of months from now will be lower,” he says. “It has nothing to do with credit cards, nothing to do with interest rates on mortgages, etcetera.”
President Donald Trump has been pounding on the Fed to cut rates to boost economic growth. After Wednesday's announcement, he tweeted “Jay Powell and the Federal Reserve Fail Again. No “guts,” no sense, no vision! A terrible communicator!”
Meanwhile, stocks dropped sharply on the news, but rebounded for mixed gains at the close of Wall Street.
“Clearly the markets want the Federal Reserve to drop hints of some additional rate cuts, that did not happen in their statement,” says Shinn. “Instead, the Federal Reserve said their door is open to rate cuts, but it's not a sure deal.”