For the second time in as many meetings, the Federal Open Market Committee cut the federal funds rate by a quarter-point, as economic risks mount.
The committee lowered the target range for the federal funds rate by 25 basis points to a range of 1.75% to 2% following a two-day meeting that concluded Wednesday.
Since the committee's last meeting in July, global uncertainties, like Brexit and trade developments, have increased, Federal Reserve Chairman Jerome Powell said Wednesday at a press conference. In a separate statement, the committee said, "The implications of global developments for the economic outlook as well as muted inflation pressures," were reasons for the cut.
Committee members project, on average, the federal rates will remain steady through 2019 and 2020 at 1.9%, rise to 2.1% by the end of 2021 and 2.4% by the end of 2022.
As he's done in the past, Mr. Powell said the committee will be flexible on future rate adjustments. "The future course of monetary policy will depend on how the economy evolves and what developments imply for the economic outlook and risks to the outlook," he said. "We've often said that policy is not on a preset course and that is certainly the case today."
Seven of the 10 committee members voted to lower the funds rate 25 basis points, while two — Kansas City Fed President Esther L. George and Boston Fed President Eric S. Rosengren — wanted to keep the rate steady, and one — St. Louis Fed President James Bullard — voted to cut the rate 50 basis points.
Cliff Corso, New York-based executive chairman at Insight Investment, said the differing viewpoints of committee members make it difficult to predict if the funds rate will be cut for a third time in 2019. Either way, it will likely be dependent on trade negotiations with China, he said.
The committee's actions supports its view that sustained expansion of economic activity, strong labor market conditions and inflation near the its 2% objective are the most likely outcomes, "but uncertainties about this outlook remain" its statement said.
The committee's next meeting is Oct. 29-30.