The Federal Reserve lowered interest rates for the first time in nine months on Wednesday, but the central bank struck a cautious approach by cutting by a quarter of a percentage point.
At the conclusion of a two-day policy meeting, the Federal Open Market Committee voted to lower its target for the federal-funds rate to 4% to 4.25%, as investors expected. Ahead of the decision, the interest-rate futures market had the odds at 96% that officials would trim rates by a quarter percentage point.
The Fed’s decision was more about risk management, as labor conditions have weakened in recent months. Yet inflation has persistently risen in recent months, with the latest August print of the consumer price index now nearly a full percentage point above the Fed’s 2% target.
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