🔗 Share this article Federal Reserve Cuts Borrowing Costs for Second Time This Year Amid Economic Uncertainty The US monetary authority lowered borrowing costs on midweek, marking the second rate cut in the current year amid economic turbulence stemming from the government closure and tariff policies. Move Comes at Extraordinary Moment for Central Bank The move to cut the benchmark interest rate by a 0.25% to a range of 4% to 3.75% comes at an extraordinary moment for the Fed. The authority has been under significant strain to cut rates even with ongoing price increases. Central Bank Announcement Highlights Labor Market Changes In a statement, the Fed said that the jobless rate had increased but remains low. “Job gains have slowed,” the statement notes. “Inflation has moved up and remains moderately high.” Government Shutdown Hinders Central Bank’s Task The ongoing federal government shutdown, now among the lengthiest in US history, has also hindered the Fed’s job. Collection of key financial statistics has been suspended without a timeline as staff at the Bureau of Labor Statistics are furloughed during the closure. Data Gap Impacts Policy Decisions The Federal Reserve typically analyzes labor statistics to determine employment trends, including the number of new jobs created to the economy and the present jobless percentage. The last jobs report was released in the beginning of last month, before the shutdown, and provided a relatively bleak snapshot of the employment scene in the previous month. The figure of positions added to the economy in the summer month was down by over 100k since the spring, and unemployment crept up to four point three percent – the peak since three years ago. Private Data Indicate Continued Slowdown Though BLS was scheduled to publish September’s job market report in early October, it halted its release once the shutdown started. Private payroll firm ADP reported recently that the business segment eliminated 32,000 jobs in last month, a sign that the job market is continuing to slow. “Both the supply and demand for workers has fallen significantly,” Fed chair Jerome Powell said recently, which he had previously said stems from trade and immigration measures. Inflation Report Shows Moderate Rise Though the bureau’s jobs report has been paused, the bureau still issued its inflation report for last month that indicated that prices are going up, although slowly. Costs increased three percent over the past twelve months, the highest since the start of the year. In April, the annual inflation rate was two point three percent, the lowest it has been since 2021. The Fed’s target inflation rate is two percent.