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Fed Cuts Rate for the First Time Since 2008
As expected, the Federal Reserve acted Wednesday to reverse course from the interest-rate increase of recent years, cutting the federal funds rate by a quarter point to a range of 2% to 2.25%. It was the first such reduction since 2008, when the Fed cut rates to essentially zero in the wake of the financial crisis.
At a news conference following the announcement from the Federal Open Market Committee (FOMC), Fed Chairman Jerome Powell called the rate cut “a mid-cycle adjustment,” and implied that it wouldn’t necessarily be followed by further cuts.
In a statement, the FOMC said the quarter-point reduction supports its view that “sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2% objective are the most likely outcomes, but uncertainties about this outlook remain.
“As the Committee contemplates the future path of the target range for the federal funds rate, it will continue to monitor the implications of incoming information for the economic outlook and will act as appropriate to sustain the expansion, with a strong labor market and inflation near its symmetric 2% objective.”
Commenting on Wednesday’s action by the Fed, Spencer Levy, CBRE’s chairman of Americas research and senior economic advisor, noted that “the current state of the U.S. economy remains supportive of CRE fundamentals.” He added that the Fed move “reduces upward pressure on cap rates.”
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- ◦Economy
