Fed Cuts Rates, Cites Data Gaps During Shutdown
The Federal Reserve (Fed) announced a 0.25 percentage-point reduction in its benchmark interest rate, citing significant limitations in economic data due to the current U.S. federal government shutdown. Chair Jerome Powell highlighted that a lack of timely labour-market and inflation signals is making policy decisions more challenging. The rate cut drew dissent from two policymakers — one arguing for a larger cut, the other for no cut at all.
Why the Cut and Why the Caution
The Fed is easing policy to support the job market, which recent data suggest is losing momentum. However, the shutdown has delayed key releases, including monthly employment and inflation figures, prompting officials to emphasise caution about future moves. Powell said that further reductions “may be the last of 2025” if fresh data do not improve.
Dissent and Policy Outlook
The two dissenting policymakers reflected deep divisions within the central bank. One favoured an immediate, larger cut to counter weakening growth; the other opposed any cut, citing persistent inflationary risk. With the shortage of hard data, the Fed stressed that it will lean heavily on private surveys and its own regional contacts until official numbers resume.
