The Federal Open Market Committee (FOMC) cut its main interest rate, the "fed funds rate" by 25 basis points, to a range of 2.00% to 2.25% Wednesday afternoon. Most market watchers reckoned a 0.25% interest rate reduction was in the cards, but a few did look for a bigger 0.5% rate cut.
The FOMC vote was 8-2 in favor of the quarter-point cut. This was the first rate decrease by the Federal Reserve in 11 years. The FOMC statement said the rate cut was enacted due to very low inflation pressures and concerns about global economic growth. The statement also suggests the door is opened to more interest rate reductions in the months ahead.
In his press conference after the FOMC statement, Fed Chairman Jerome Powell said the Fed is not planning a long series of interest rate reductions. That spooked the stock market bulls a bit and stock indexes sold off. The U.S. dollar index rallied to a new high for the year, as greenback bulls were happy the Fed did not cut rates by a half-point.