Fed cuts US interest rates again despite ‘flying blind’

Friday, 31 October 2025 00:02 - - {{hitsCtrl.values.hits}}

The US Federal Reserve on Wednesday pushed forward with an interest rate cut as inflation fears continue to take a backseat to concerns about a stalling labour market.

It came despite the US Government shutdown nearing its one-month mark, which delayed official data and left Central Bankers “flying blind” about the job market, economists said.

The US Central Bank said on Wednesday it was lowering the target for its key lending rate by 0.25 percentage points, putting it in a range of 3.75% to 4%.

The Fed last month cut interest rates for the first time since last December. Economists expected the move to jump-start further reductions, but the data drought means the trajectory for future cuts looks murky.

Two voting members on the Fed’s committee opposed the Central Bank’s decision on Wednesday.

Stephen Miran, who is on leave from his post leading US President Donald Trump’s Council of Economic Advisers, voted for a larger 0.5 percentage point cut. Federal Reserve Bank of Kansas City President Jeffrey Schmid voted to hold rates steady.

The Fed’s latest cut brings the target for its key lending rate down to its lowest level in three years, easing borrowing costs across the US.

A slowdown in job hiring prompted the Fed to restart its rate cutting cycle in September. In a policy statement on Wednesday, the Central Bank reiterated that “job gains have slowed this year” and that the unemployment rate, though still low through the end of summer, has now “edged up.”

At a press conference following the cut, Fed Chair Jerome Powell called the labour market “less dynamic and somewhat softer” than earlier this year, pointing in part to lower immigration. Still, he said weakness in the job market does not appear to be accelerating.

But the ongoing Government shutdown has stalled the release of the official monthly jobs report for September, limiting Central Bankers’ insight into how the labour market has fared since their last meeting.

Alternative sources including private-sector data have pointed to an ongoing trend of sluggish hiring. The US economy lost 32,000 jobs in September, according to data from the payroll firm ADP.