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Dow Drops More Than 300 Points After Fed Cuts Interest Rates

© AP Photo / LM OteroStacks of $100 bills at the Bureau of Engraving and Printing Western Currency Facility in Fort Worth, Texas
Stacks of $100 bills at the Bureau of Engraving and Printing Western Currency Facility in Fort Worth, Texas - Sputnik International
Following a decision by the US Federal Reserve to cut interest rates Wednesday for the first time in 11 years, US stocks declined rapidly.

The Dow Jones Industrial Average (DJIA) fell by 1.23% at the closing bell Wednesday, losing 333.75 points - its worst day since May. The S&P 500 dropped 1.1% and the Nasdaq Composite 1.2%.

The fall came in the wake of expected news that the US central bank would cut interest rates, reducing them by 25 basis points, to a base range of 2-2.25%. It was the first time the Fed cut interest rates since the 2008 financial crisis, when it rapidly slashed rates to zero.

Federal Reserve Chair Jerome Powell described the cut as a "mid-cycle adjustment," meaning the Fed would weigh heavily any further decision to cut interest rates.

Generally speaking, raising interest rates is intended to curb investment by making loans more expensive, and lowering interest rates is intended to encourage it. US President Donald Trump has strongly demanded the Fed cut interest rates as an economic stimulus and to maintain a more favorable foreign exchange rate, but the most recent economic data shows the US economy expanded by a healthy 2.1% in the second quarter of Fiscal Year 2019, which covers January through March.

Powell asserted on Wednesday that "We never take into account political considerations. There's no place in our discussions for that ... We don't conduct monetary policy in order to prove our independence."

Shortly after the Federal Reserve's announcement, US President Donald Trump took to Twitter, writing that Powell "let us down."

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