Federal Reserve cuts interest rates for first time since 2008

The United States Federal Reserve lowered its benchmark rate by a quarter-point yesterday, its first rate cut since December 2008.

The policymaking Federal Open Market Committee drops the target range to 2 percent to 2.25 percent for its overnight lending rate, or 25 basis points from the previous level.

The Fed cites “implications of global developments for the economic outlook as well as muted inflation pressures” in its first rate cut since 2008.

The Fed also leaves the door open to future cuts, saying it will “act as appropriate to sustain the expansion.”

The Federal Reserve also ends its balance sheet reduction two months earlier than planned.

Sri Lanka’s First Capital, however, anticipates the external environment to favour Sri Lanka.

With the US Dollar expected to weaken during the 2H 2019, First Capital, expects the rupee to be supported by lower imports amidst lack of consumer demand.

In Sri Lanka they expect the improving external environment and strong foreign reserve position to favour in order to maintain the current low yields on securities over the next 6 – 9 months.

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