Summary
The U.S. Federal Reserve has reduced its key interest rate by 0.25% to a range of 3.75% to 4.00% due to a slowing labor market and ongoing inflation concerns. This action marks the second rate cut by the Fed this year as they balance between supporting economic growth and controlling inflation. The decision coincides with a government shutdown, which is limiting available economic data.
Key Facts
- The Federal Reserve cut the interest rate by 0.25 percentage points.
- The new interest rate range is between 3.75% and 4.00%.
- The labor market is slowing, with unemployment slightly increasing.
- Inflation has risen since earlier in the year and remains high.
- There was a 97.8% probability of a rate cut as predicted by CME Fed Watch.
- Some banks predict one more rate cut later in the year, except Bank of America.
- The ongoing government shutdown has been going on for 29 days, affecting economic data releases.
- Consumer confidence dropped to its lowest in six months, with people earning less than $75,000 feeling less optimistic about job security.
