WASHINGTON — The Federal Reserve on Wednesday lowered interest rates for the first time since the Great Recession in 2008 to help stave off the possibility of an economic downturn.
Policymakers led by Fed Chairman Jerome Powell voted in favor of a small cut in the federal funds rates, keeping their promise to “act as appropriate” to sustain the country’s longest economic expansion in history.
Interest rates, which affect the cost of borrowing for credit cards and mortgages, are now set to hover between 2% and 2.25%.
The central bank is hoping a rate cut will be the necessary injection to keep the US economy healthy, especially given it has limited ammunition to respond to a downturn with such historically low interest rates.
The rate cut follows months of pressure from President Donald Trump, who has broken with his predecessors’ practice of walling off the central bank from politics.
The Fed also announced plans to end the reduction of its $3.8 trillion asset portfolio, effective August 1, two months earlier than previously expected. The runoff was set to end after September.