Businesses have pared investment in response to the US-China trade war that both raised tariffs on many goods, and also made the world a riskier place to make long-term commitments. And unless it wants to anger stock and bond investors and US President Donald Trump, Fed Chairman Jerome Powell will cut interest rates for the third-straight time.
USA manufacturing activity is at a decade low, amid sobering global signals that the trade war is having an impact - which the International Monetary Fund has described as a "synchronised slowdown". Unless inflation rises significantly, there is no reason to hike rates and if data continues to disappoint, the Fed may act as appropriate and lower rates even further. But it hinted that it won't cut again at its next meeting.
The Fed's move reduces the short-term rate it controls - which influences many consumer and business loans - to a range between 1.5 percent and 1.75 percent. They have opposed all three Fed rate cuts this year as unnecessary.
The policymakers base their assessment on whether to raise, hold steady or cut interest rates on how they think the economy is now performing and how they think it will do in coming months. But by cutting rates the Fed is trying to counter uncertainties heightened by President Donald Trump's trade conflicts, a weaker global economy and a decline in US manufacturing.
Earlier Wednesday, the government issued its first estimate of how the economy fared in the July-September quarter - an annualised growth rate of 1.9 percent.
The decision comes as USA economic growth slowed to an annual rate of 1.9% in the most recent quarter.
Americans gash attend on spending at retail outlets and restaurants last month, a worrisome tag because individual spending is the main source of business growth. "Fed was way too fast to raise, and way too slow to cut!"
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However, the bill is still to be approved by the House of Lords but it could become law by the end of the week. Johnson's version of the withdrawal agreement also did not win support in the House. "We don't know.
Powell noted that a potential "phase one" trade deal between the United States and China and signs that the UK may be able to orchestrate a smooth exit from the European Union may mean that risks are less dire and could boost business confidence.
The Federal Reserve concludes its latest two-day policy meeting on Wednesday to set a key USA interest rate that impacts investors, consumers, and companies around the world.
The S&P 500 index closed at another record high on Wednesday.
The Fed cut lowered its policy rate to a target range between 1.50% and 1.75%, but dropped a previous reference in its statement to "act as appropriate" to support the economic expansion, which could signal the Fed may hold off on future rate cuts.
However, the trade war uncertainty also has hit the global economy, and the U.S. data contained concerning signs as well, even as American consumers continue to carry the weight of the expansion on their backs.
Dr. Kerstin Braun, president of Stenn Group, an global provider of cross-border trade finance, said looking to the Fed to solve the issues in the economy won't work.