Daijiworld Media Network - Washington

Washington, Oct 30: The US Federal Reserve on Wednesday trimmed its benchmark interest rate by 0.25 percentage points, setting a new target range of 3.75% to 4%, as policymakers navigated a clouded economic landscape caused by the prolonged federal government shutdown.

This marks the second rate cut of the year, approved by a 10–2 vote, and the first time borrowing costs have fallen below 4% since late 2022.

The shutdown, now in its fifth week, has disrupted the collection of vital economic data from key agencies such as the Bureau of Labor Statistics, leaving the Fed to operate with only a partial picture of the U.S. economy.

Citing uncertainty over employment, inflation, and consumer spending trends, the central bank said the lack of timely information influenced its decision to lower rates.

Before the shutdown, the economy had shown steady job growth and moderating inflation, but the absence of fresh data has made it difficult to gauge whether those trends are continuing. In the meantime, the Fed has turned to private-sector surveys and market indicators to fill the information gap.

The move follows a similar quarter-point rate cut in July, part of the Fed’s broader strategy to support economic momentum amid slowing growth and market volatility.

Since 2022, the central bank has raised rates repeatedly to curb high inflation. However, Wednesday’s decision reflects a shift toward flexibility, as officials balance the risks of cooling the economy too sharply against lingering inflation pressures.

Economists say the latest cut highlights the Fed’s readiness to adjust monetary policy even with incomplete data, aiming to maintain stability while waiting for the government’s statistical agencies to resume normal operations.