The Federal Reserve lowered the federal funds rate from 2.25% to 2% today during the scheduled meeting of the Federal Open Market Committee, saying that the current measures may be enough to remove the risks.
As the majority of the traders expected, FOMC reduced the interest rate for the U.S. financial market by 25 basis points and signaled that, although the current situation on the markets is weak and the inflation is starting to grow, the reduced rate should help the economic growth and will lower the risks:
The substantial easing of monetary policy to date, combined with ongoing measures to foster market liquidity, should help to promote moderate growth over time and to mitigate risks to economic activity. The Committee will continue to monitor economic and financial developments and will act as needed to promote sustainable economic growth and price stability.
Two out of ten FOMC members decided to vote against the rate cutting decision (they preferred to keep the rate unchanged), which means that the next meeting will probably result in no change to the interest rate.
The EUR/USD currency pair reacted with a little volatility on this news and remained inside the daily range, which was quite low.
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