Fed again cuts interest rates as economic growth slows

Fed cuts interest rates for 3rd time this year in effort to prolong economic growth

The Federal Reserve has lowered its benchmark interest rate for the third time this year, in a bid to shore up U.S. economic growth. The central bank also signaled that this rate cut might be the last in a while, barring a sharp downturn in the economy.

The cut of 0.25 percentage points, which was widely expected, brings the Fed's target rate to a range of 1.5% to 1.75%. Less clear is where central bankers go from here amid signs the economy is slowing down.

Addressing reporters Wednesday afternoon, Fed Chairman Jerome Powell implied the economy had stabilized and that the U.S. is potentially at a turning point in its trade wars.

"We now have a phase one trade agreement with China, which, if signed, could go toward reducing trade tensions, and would bode well for business confidence over time," he said. In addition, "It appears that the risk of a no-deal Brexit seems to have materially declined," he noted.

The Fed's statement also dropped a reference to sustaining the economic expansion and instead said it would "continue to monitor the implications of incoming information" as it determines "the appropriate path" for interest rates.

The shift is "a clear sign that the Fed thinks it has done enough for now to achieve the mid-cycle adjustment in interest rates they believe is necessary to limit risks to the U.S. expansion from global developments," Brian Coulton, chief economist at Fitch Ratings, said.

Earlier on Wednesday, government data showed that the economy grew at a 1.9% annual rate in the July-to-September quarter. That is down from  3.1% in the first quarter and 2.9% for the year-ago period.

CBS News poll: Americans split on the future of the economy

The Fed has now nearly completely reversed the four rate hikes it made last year in response to a strengthening economy. While some investors are hoping for a fourth rate cut this year, others say that is premature.

"As long as economic readings stabilize and inflation continues to edge higher, we do not think that the Fed will ease again in December," Ben Ayers, senior economist at Nationwide, said in a note.

Ayers added that financial markets are predicting less than a 1-in-4 chance of another rate cut before 2020. "There is higher degree of uncertainty than usual, however, and a negative turn in growth readings or geopolitics could prompt further stimulus from the Fed to sustain the expansion," he said.

The Associated Press contributed reporting.

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