Federal Reserve cuts rates for second time as shutdown stalls key data

The Federal Reserve cut interest rates for the second consecutive month Wednesday as questions swirl about the true strength of the U.S. economy.

The Federal Open Market Committee (FOMC), the panel of Fed officials in charge of monetary policy, reduced its baseline interest rate to a range of 3.75 to 4 percent, cutting it by 0.25 percentage points. Officials voted 10 to 2 in favor of the rate cut, with Fed Governor Stephen Miran instead supporting a larger 0.5 percentage point cut, and Kansas City Fed President Jeffrey Schmid supporting no move at all.

After months of keeping interest rates steady despite pressure from President Trump, Fed officials changed course in September. The FOMC began bringing interest rates down in the last month and suggested in projections that they would likely do so again at least once more before the end of the year.

But Fed officials had to make Wednesday’s decision without key federal economic data amid the ongoing government shutdown. With the Bureau of Labor Statistics (BLS) mostly shuttered during the shutdown, the Fed had no federal jobs report for October to guide them.

Instead, the FOMC had to rely on a patchwork of private-sector data, a delayed consumer price index (CPI) and the Fed’s regular surveys of businesses and nonprofits for the latest insight on the economy.

Despite the wild card of a lack of federal data, Wall Street traders and analysts expected the Fed to cut Wednesday as central bankers face a difficult crossroads.

The U.S. labor market has slowed significantly throughout 2025, adding an average of just 29,000 jobs a month. The unemployment rate has risen to 4.3 percent from 4 percent in January, and the rate of hiring has slowed to levels not seen since the COVID-19 pandemic.

Inflation has also steadily risen since the summer, hitting an annual rate of 3 percent in September, according to the latest CPI data. 

“There is no risk-free path for policy as we navigate the tension between our employment and inflation goals,” Federal Reserve Chair Jerome Powell said at the National Association for Business Economics (NABE) conference in Philadelphia earlier this month.