The U.S. central bank cut interest rates Wednesday for the first time since the 2008 financial recession in a bid to preserve the country’s economic expansion amid global uncertainties and a possible impending slowdown.
The Federal Reserve lowered its benchmark rate by 25 basis points to a range of 2%-2.25% percent.
“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,” the Federal Open Market Committee (FOMC) said in a statement.
The FOMC said it seeks to foster maximum employment and price stability.
It said the move supports its view that sustained expansion of economic activity, strong labor market conditions and inflation near its symmetric 2% objective were the most likely outcomes, "but uncertainties about this outlook remain".
The committee said overall inflation and inflation for items other than food and energy were running below 2% on a 12-month basis, and "market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed".
It said it would continue to monitor the implications of incoming information for the economic outlook and act as appropriate to sustain the expansion.
Only Esther George, president of the Federal Reserve Bank of Kansas City, and Eric Rosengren, president of the Federal Reserve Bank of Boston, voted against the decision.
By Gokhan Kurtaran in London