For the first time in more than 10 years, the Federal Reserve Bank has cut interest rates.
The move makes the first time since the 2008 recession that the bank has cut interest rates – a move designed to continue the economy’s growth. According to a statement, the Fed “seeks to foster maximum employment and price stability” by cutting the interest rate.
On Wednesday, the Fed announced that it has lowered the target range for federal funds by a a quarter of a percent – to 2 percent from 2 ¼ percent.
Cutting the interest rate is designed to decrease borrowing costs and stimulate investment in the U.S. economy. The “most likely outcomes” of the rate decrease, according to the Fed, are “sustained economy activity, strong labor market conditions and inflation near the Committee’s symmetric 2 percent objective…”
While the Federal Reserve anticipates continued economic growth, it says it will monitor the economic outlook and adjust the interest rates as necessary.
“This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments,” Federal Reserve officials said in a statement.
In June, the U.S. Bureau of Labor Statistics announced that 224,000 jobs had been created, while the unemployment rate remained steady at 3.7 percent. The majority of job gains were made in professional and business services, health care, transportation and warehousing, according to the report.
Former U.S. Secretary of Labor Alexander Acosta had praised the jobs report, saying that it had “surpassed expectations” and showed that the employment numbers were exceeding population growth.
“The June jobs report surpassed expectations adding 224,000 jobs to the economy, totaling 5.6 million jobs created since January 2017,” Acosta said. “This report included other good news as wages increased at or above 3% year over year for 11 straight months. Wage growth for production and non-supervisory workers increased 3.4% over the past 12 months.”
Meanwhile, Arkansas’ unemployment numbers dropped in June, decreasing from 3.7 percent to 3.5 percent.