WASHINGTON _ The Federal Reserve made another interest rate cut on Wednesday but sought to temper expectations for further reductions, even amid fresh signs of a slowing U.S. economy.
The Fed has now lowered its benchmark rate at each of the last three meetings, essentially to offset the adverse effects of the U.S.-China trade war and weakening global growth, which are threatening to undercut what this summer became the longest economic expansion in American history.
In its statement issued after a two-day meeting, the central bank reiterated concerns about global developments affecting the U.S. outlook, as well as the persistently muted inflation level.
At the same time, policymakers removed language in prior statements that the Fed would "act as appropriate to sustain the expansion," which analysts had interpreted as a kind of rate-cut bias. Wednesday's statement instead said that the Fed would monitor the economic outlook as it "assesses the appropriate path" of its main interest rate.
Investors were widely expecting Wednesday's announcement of a quarter-point cut, to a range between 1.5% and 1.75%. Based on futures data before the meeting, markets saw a 25% chance of another rate cut in December.
Fed committee members voted 8 to 2 for the latest action. Two voiced a desire a keep rates where they were.
Hours before Fed officials announced the quarter-point rate cut, the Commerce Department reported that the U.S. economy expanded in the third quarter at an annual rate of 1.9%. That's down from 2% in the second quarter and 3.1% in the first three months of this year.
While that's still moderate growth, and fears of imminent recession have eased in recent weeks, the Commerce report showed the damage already inflicted by the trade friction between the globe's two largest economies, and the disruption it has caused many companies.
U.S. business investments and net exports both fell for the second straight quarter. Consumer spending continued to hold up the American economy, but the pace of spending softened in the latest quarter and could weaken further if job growth continues to ease.
With three quarter-point rate cuts since July, the Fed's benchmark interest rate now stands at a range between 1.5% and 1.75%.
Wednesday's move, like the two earlier ones, was widely anticipated and as such had already been priced in to stock markets and factored in to mortgage rates, which have fallen more than full percentage point from last November, to an average 3.75% for a 30-year fixed loan as of last week.
The Fed's rate cuts and communications have clearly helped boost the housing market, which was one of the bright spots in the third quarter. "Without a doubt, the lower rate is helping," said Lawrence Yun, chief economist at the National Association of Realtors.
Looking ahead, Blerina Uruci, an economist at Barclay's Capital in Washington, sees diminishing returns from the Fed's lowering of borrowing costs. She expects the Fed to make another quarter-point cut at its last meeting of the year in December, but even then, she said, it's not likely to add much energy to the housing market or the broader economy.
