US Fed cuts interest rate for second time this year

WASHINGTON -- The US Federal Reserve on Wednesday decided to lower the target range for the federal funds interest rate by 25 basis points to 3.75 to 4 percent, marking its second rate cut this year.

Available indicators suggest that economic activity has been expanding at a moderate pace, job gains have slowed this year, and the unemployment rate has edged up but remained low through August, the Federal Open Market Committee (FOMC), said in a statement after a policy meeting.

The FOMC, the principal monetary policymaking body of the Federal Reserve System, said it seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run.

"In support of its goals and in light of the shift in the balance of risks, the Committee decided to lower the target range for the federal funds rate by 1/4 percentage point to 3-3/4 to 4 percent," the statement said.

"In considering additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks," it said.

Of the 12 FOMC members attending the meeting, 10 voted for the 25-basis-point cut, Stephen Miran preferred a 50-basis-point cut, and Jeffrey Schmid preferred no change to the target range for the federal funds rate.

The rate cut comes as the Fed struggles with a paucity of reliable economic data due to the federal government shutdown, which began on Oct. 1.