The Federal Reserve cut short-term interest rates Wednesday for a third time this year, but it signaled that it plans no further cuts unless it sees clear evidence that the economic outlook has worsened.
The Fed’s move reduces the short-term rate it controls — which influences many consumer and business loans — to a range between 1.5 percent and 1.75 percent.
For now, Chairman Jerome Powell sounded a bullish note about the economy in a news conference after the Fed’s latest policy meeting. Despite some signs of weakness, the Fed expects growth to continue and the job market to remain strong.
Since spring, manufacturing output has stumbled amid trade tensions and slower global growth, while businesses have cut spending on large equipment. But Powell stressed that the Fed doesn’t see those trends weakening the broader economy. Instead, steady hiring is keeping unemployment very low, boosting consumer confidence, and encouraging more spending.
“Monetary policy is in a good place,” Powell said. “If developments emerge that cause a material reassessment of our outlook we would respond accordingly. Policy is not on a pre-set course.”
Some of the global and trade threats that have been bedeviling the economy have receded, Powell said, thereby reducing the need for future rate cuts. The U.S. and China have reached a tentative truce that has cooled their trade war. And the European Union has agreed to extend the deadline for the United Kingdom’s exit from October 31 to January 31, lowering the likelihood of an economically disorderly “no deal” Brexit.
“On both, the risks appear to have subsided,” he said. “That could bode well for business confidence and activity over time.”