WASHINGTON: The Federal Reserve is expected to announce its second rate cut of the year on Wednesday, despite a lack of clarity over the health of the US economy due to the ongoing government shutdown.
The US central bank’s second-to-last rate meeting of the year is taking place against the backdrop of a weeks-long standoff between Republicans and Democrats over healthcare subsidies, resulting in the ceased publication of almost all official data.
Without these key insights into the US economy, Fed officials will be forced to set interest rates without the full spectrum of data they normally rely upon.
Analysts and traders expect the bank will plough ahead with a quarter percentage-point cut, lowering its key lending rate to between 3.75 percent and 4.00 percent, without giving too much away about the final rate cut of the year in December.
The lack of official information complicates the ongoing debate at the Fed over whether to cut rates swiftly in order to support the weakening labor market, or to stand firm in the face of inflation which remains stuck stubbornly above the bank’s long-term target of two percent, fueled by Donald Trump’s sweeping tariffs on top trading partners.
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