“We took this step to help keep the U.S. economy strong in the face of some notable developments and to provide insurance against ongoing risks,” Powell told reporters Wednesday after the Fed cut its benchmark rate by a quarter percentage point to a range of 1.75% to 2%. “Weakness in global growth and trade policy have weighed on the economy.”

Treasury yields rose, the dollar rallied and U.S. stocks reversed earlier losses after Powell made clear that policy makers did not expect to need deep rate cuts.

The chairman has been under relentless public pressure to reduce rates from President Donald Trump, who returned to Twitter within minutes of the FOMC’s announcement to say policy makers had failed again by not cutting more and had “No ‘guts,’ no sense, no vision!”

The Federal Open Market Committee decision didn’t alter expectations among futures traders for another 25 basis-point cut this year.

Powell left the door open to “a more extensive sequences of cuts” if needed, but stressed this was not what officials expect. Instead, he described the situation as one “which can be addressed and should be addressed with moderate adjustments to the federal funds rate.”

Fed officials maintained their pledge to “act as appropriate to sustain the expansion.”
“Although household spending has been rising at a strong pace, business fixed investment and exports have weakened,’’ the FOMC said.

Updated quarterly forecasts showed officials split over the need for rate cuts this year. Five didn’t want to move. Five saw a quarter-point reduction warranted, while seven saw 50 basis points of easing needed by year-end — half of which was delivered on Wednesday.

The Fed board also took a separate step to calm this week’s strains in money markets and avert harm to the economy, lowering the interest rate on excess reserves to 1.8%. Earlier Wednesday the Fed injected $75 billion of liquidity to ease a crunch, and key rates pulled back from elevated levels.

Read more: Powell Seeks to Regain Control Over Fed Funds With IOER Tweak

Global Risk

Powell is trying to sustain the expansion despite slowing global growth that’s been chilled by uncertainty over U.S. trade policy, fanning fears of recession. Manufacturing has been hit hard, particularly in Germany, which prompted the European Central Bank to ease policy last week.

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Kansas City Fed chief Esther George and Boston’s Eric Rosengren dissented against the reduction, as they did in July, preferring to keep rates unchanged. There was a new dissent by James Bullard of St. Louis, who preferred a half-point cut.

Powell’s committee is split between those who don’t think cuts are needed because domestic spending is solid and those worried by global weakness and inflation running persistently under their 2% goal.

“This statement seems carefully crafted to be silent on that question,” said David Wilcox, a former senior Fed economist and now at the Peterson Institute for International Economics in Washington. “There is no clue here as to whether this is the end of the line.”

Fed officials also released new quarterly forecasts. There were few changes in the central bank’s median economic projections since the June policy meeting. Gross domestic product growth and unemployment were revised up 0.1 percentage point for 2019, while the forecasts for the preferred inflation gauges remained unchanged.

The Fed’s back-to-back rate cuts reverse the tightening last year and follow a wave of easing this year by other central banks. In addition to the ECB, some analysts expect the Bank of Japan to act at its meeting Thursday.

U.S. central bankers, who added the reference to exports, worry that uncertainty over trade is denting investment and could slow hiring. Private-sector job growth has slowed from last year.

At the same time, consumption — which accounts for most of the economy — appears strong with retail sales rising 0.4% in August and sentiment indicators relatively solid. Financial conditions have remained easy since the July meeting, although the dollar has resumed gains against major currencies.