U.S. central bank cuts interest rate for 2nd time this year

After spending a decade on the sidelines, the U.S. central bank has cut its benchmark interest rate for a second time this summer, in a bid to stimulate the U.S. economy.

The Federal Reserve lowered its key lending rate to a range of between 1.75 and 2 per cent on Wednesday, a reaction to an escalating trade war between the U.S. and China, and recent tensions in the Middle East, casting doubt on the growth prospects for the world’s largest economy.

In July, the Fed made its first rate cut in more than a decade, and in doing so raised expectations it would follow with up to three additional cuts before the end of the year.

Most economists have scaled back their expectations about how deep the Fed will cut since then, but at least one or two more cuts are still the most likely scenario.

Federal Reserve chair Jerome Powell, who has been harshly criticized by Trump for not cutting rates sooner, will lay out the bank’s line of thinking at a press conference following this afternoon’s decision.

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