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Interest rates

US Federal Reserve Cuts Interest Rates for Second Straight Month

Strategic Insights

— 1 min read

The US Federal Reserve, in response to the government shutdown and growing uncertainty about the US economy, has cut its benchmark interest rate for the second straight month. Despite the lack of crucial federal economic data, the Fed made its decision on Wednesday, citing private-sector data and its own surveys of businesses and nonprofits to assess the economy's health. The labor market has weakened, with an average of just 29,000 jobs per month added in 2025, while the unemployment rate has climbed to 4.3% from 4% in January.

Key Takeaways:

  • The US Federal Reserve cut its benchmark interest rate by 0.25% to 3.75%-4% for the second straight month, amid data gap caused by the government shutdown.
  • The decision passed by a 10-2 vote, with Fed Governor Stephen Miran advocating for a deeper 0.5-point cut and Kansas City Fed President Jeffrey Schmid preferring to hold rates steady.
  • Private-sector data, delayed consumer price index, and the Fed's own surveys of businesses and nonprofits were relied upon to assess the economy's health.
  • The labor market has weakened in 2025, with an average of just 29,000 jobs per month added, while the unemployment rate has climbed to 4.3% from 4% in January.
  • Inflation has been edging higher, reaching an annual rate of 3% in September, according to the most recent CPI data.
  • The Federal Open Market Committee (FOMC) indicated plans for at least one more reduction in interest rates before year's end.
  • The Fed started lowering rates in September, after months of resisting pressure from President Trump to ease policy.
  • The decision was made under unusual circumstances, with the government shutdown halting the release of crucial federal economic data.

Statistics:

  • 0.25%: The decrease in interest rates by the US Federal Reserve to 3.75%-4%.
  • 10-2: The vote margin by which the Fed made its decision to cut interest rates.
  • 29,000: The average number of jobs per month added in 2025.
  • 4.3%: The current unemployment rate, up from 4% in January.
  • 3%: The annual inflation rate in September, according to the most recent CPI data.
  • At least one more reduction: The planned cut in interest rates by the Fed before year's end.

Sources:

  • IE Online Media Services Pvt. Ltd.
  • Contify.com

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