Mubasher: The US Federal Reserve lowered its benchmark interest rate for the second time this year.

The Federal Open Market Committee (FOMC) decided to lower its interest rates in the range of 1.75% to 2%, citing “the implications of global developments for the economic outlook as well as muted inflation pressures.”

Five officials were for retaining rates at their current range of 2.25% to 2.5%, while five saw a quarter point as ample this year, while seven wanted a half point.       

Kansas City Fed president Esther George and Boston Fed president Eric Rosengren opposed the reduction, as they did in the July meeting, favouring holding the rates unchanged

However, the FOMC acknowledged “strong” US labour market as well as “solid” job gains.

The committee also pointed to the resilience of household spending, but it also stated that “business fixed investment and exports have weakened.”

The US policymakers reiterated their pledge to “act as appropriate to sustain the expansion.”

The Fed lowered the interest rate on excess reserves to 1.8%, a separate measure to mitigate strains in money markets and avoid impact to the world’s biggest economy.

In addition, the Fed injected $75 billion of liquidity to ease a crunch.

In response to the US central bank’s statement, Treasuries continued to rally, as the dollar strengthened further, while US stock markets extended losses.