Breaking: Fed Cuts Rates For Third Time This Year

WASHINGTON (AP) — Federal Reserve cuts rates for 3rd time this year but signals it will pause its rate reductions.

The Federal Open Market Committee lowered its benchmark funds rate by 25 basis points to a range of 1.5% to 1.75% as expected.

Chairman Jerome Powell has said that the central bank's rate reductions are intended as a kind of insurance against threats to the economy, notably from President Donald Trump's trade war with China and from a broader global slowdown. Powell has pointed to similar rate cuts in 1995 and 1998 as precedents; in both cases, the Fed cut rates three times.

The key issue at this week's meeting is whether the Fed has taken out enough insurance. Powell and other Fed officials credit their rate cuts with lowering mortgage rates, lifting home sales and generally keeping the economy on track.

Hopes have also been lifted by a truce in the U.S.-China trade fight, and the unemployment rate has reached a 50-year low, suggesting that perhaps further rate reductions aren't necessary. On the other hand, there is some evidence that the economy is weakening: Retail sales and business investment in heavy equipment both fell, for example, last month. The U.S. manufacturing sector by some measures is already in a recession.