Federal Reserve Cuts Interest Rates Again as Economic Concerns Mount
WASHINGTON – The US Federal Reserve lowered its benchmark interest rate by a quarter point on Wednesday, bringing the range to 3.75% to 4%. This marks the second rate cut of the year, responding to growing economic uncertainty fueled by the ongoing federal government shutdown and the impact of President Trump’s tariffs.
The decision comes despite persistent inflation, which has “moved up and remains somewhat elevated,” according to a Fed statement. While the unemployment rate remains low,the central bank noted that “job gains have slowed.”
The ongoing government shutdown is complicating economic assessment, as data collection by the Bureau of Labor Statistics (BLS) has been halted due to furloughs. The last jobs report, released in early September, presented a concerning picture of the labor market, showing a decrease of over 100,000 jobs added as the spring and an unemployment rate increase to 4.3% – the highest since 2021. September’s jobs report was suspended due to the shutdown. Private payroll firm ADP reported a loss of 32,000 jobs in the private sector for September, indicating a continued slowdown.
Federal Reserve Chair Jerome Powell stated earlier this month that both the supply and demand for labor have “declined quite sharply,” previously attributing this to both Trump’s immigration and tariff policies.
Despite the data disruption, the BLS did release its inflation report for September, revealing a 3% price increase over the past year - the highest as January. This is up from an annual inflation rate of 2.3% in April,the lowest since 2021.The Fed’s target inflation rate is 2%.
