WASHINGTON — The Federal Reserve cut interest rates for the first time in more than a decade, an effort to guard the record-long economic expansion against mounting global risks.
The widely expected quarter-point move, the Fed’s first since it cut rates to near zero in 2008, is meant to protect the economy against the potentially harmful effects of a growth slowdown in China and Europe and uncertainty from President Trump’s trade war.
“In light of the implications of global developments for the economic outlook as well as muted inflation pressures, the committee decided to lower the target range for the federal funds rate,” according to the Fed’s policy statement.
The Fed also announced an early end to its efforts to shrink its balance sheet. The central bank’s bond holdings swelled during the financial crisis as it bought assets to try to reinvigorate growth. Policymakers have been slowly siphoning off securities to return their balance sheet to a more normal size, and that process was slated to end in September. It will now conclude Aug. 1.
Both Eric Rosengren, the president of the Federal Reserve Bank of Boston, and Esther George, the president of the Federal Reserve Bank of Kansas City, voted against Wednesday’s decision in favor of leaving rates unchanged. Those dissents marked the second and third of Jerome H. Powell’s term as chair.