Federal Reserve lowers interest rates for the first time since the 2008 recession

The Federal Reserve announced on Wednesday that it was lowering interest rates for the first time since the Great Recession of 2008.

What happened today?

In a news release, the Fed announced that it was lowering interest rates because "[o]n a 12-month basis, overall inflation and inflation for items other than food and energy are running below 2 percent" and "survey-based measures of longer-term inflation expectations are little changed."

Rates had been hiked nine times since 2015.

Why does the Fed raise or lower rates?

The Federal Reserve periodically raises interest rates during periods of economic growth to prevent inflation from getting out of control.

President Donald Trump has been critical of the Fed raising interest rates so often during his presidency, since lower rates could boost economic growth. However, the Federal Reserve prides itself on being politically independent, and has not responded to Trump's demands.

How does this compare to interest rates in the past?

But even before this latest rate cut, interest rates were still at some of their lowest in decades. At the end of 1988, the interest rate was 9.75 percent.

The Fed dramatically lowered the interest rate from 5.25 percent in 2007 to between zero and 0.25 percent by December 2008. It stayed this low for several years, before slowly beginning to climb again. It had dropped to 3 percent by 1992, only to inch back up to 6.5 percent in 2000. It fell back down to 1.25 percent in 2003, before climbing to 5.25 by the eve of the 2008 recession. The highest interest rate was 20 percent, which happened in 1980 and 1981.