Federal Reserve Cuts Interest Rates to Lowest in Three Years Amidst Government Shutdown Uncertainties
The Federal Reserve announced another quarter-point interest rate cut on Wednesday. This adjustment brings the benchmark rate to a range between 3.75% and 4% – the lowest level seen in three years. Despite this, central bank officials did not provide explicit guidance for their upcoming decision in December, due to the ongoing disruptions caused by the government shutdown.
Fed Chair Jerome Powell highlighted the challenging circumstances, stating that officials have been “forced to make monetary policy determinations without key federal economic data, including inflation and jobs reports, due to the government shutdown.” This lack of data has created a cloud of uncertainty over the world’s largest economy. Powell issued a warning that if this situation “persists for much longer,” the Fed may need to halt rate cuts until there’s better clarity.
In the meantime, Treasury yields saw a slight increase ahead of the decision, with the two-year yield at 3.52% and the 10-year at 4.01%. The rate cut comes at a time when investors are closely watching Big Tech earnings and the ongoing US-China trade relations. Powell acknowledged that the Fed is operating in “arguably the most pivotal stretch for markets.”
Source: CNN Business