The United States Federal Reserve on Wednesday slashed interest rates for the second time this year in a bid to shore up the country’s economy. President Donald Trump, however, lashed out at the committee that sets rates for having “no guts”, as he wants rates to be cut faster.
The Federal Reserve lowered the target range for its interest rates by 25 basis points to 1.75%-2%. A basis point is one-hundredth of a percentage point.
The US Federal Reserve had reduced interest rates to near-zero levels to help boost the economy after the financial crisis of 2008, and kept them at those levels for nearly eight years. In the last three years, however, it had increased the rates gradually as the economy recovered. A rate cut in July and another one now are the only two reductions since 2008.
The US economy presents a mixed picture currently. While consumption is high and unemployment is lowest in decades, the trade war with China has slowed the manufacturing sector, according to CNN.
Trump said in a tweet that the Federal Reserve and its chairperson, Jerome Powell, had “failed again”. “No guts, no sense, no vision! A terrible communicator!” he said. Trump had last week called for negative interest rates, which would help borrowers earn rather than pay interests for loans. Several European central banks had cut interest rates to negative levels after the financial crisis. Lower interest rates encourage lending, thus boosting the economy when it is slowing down.
Addressing reporters, Powell said that the economy remained strong and unemployment was low, but there were risks, and more rate cuts would follow if the economy weakened further.
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