Fed cuts rates again but casts doubt on December slash

The Federal Reserve on Wednesday approved its second straight interest rate cut, lowering its benchmark rate to a range of 3.75% to 4%. It is the lowest rate in three years.

The move aims to support the economy as inflation stays at 3%, above the Fed’s 2% target.

Chair Jerome Powell cautioned that another rate cut in December is “not a foregone conclusion, far from it,” signaling divisions among policymakers.

Dissenting votes came from Governor Stephen Miran, who wanted a larger cut, and Kansas City Fed President Jeffrey Schmid, who preferred none at all.

The central bank also announced that it will end its $2.3 trillion asset-reduction program, known as quantitative tightening, on December 1.

The decision came as the government shutdown delayed key economic reports, leaving the Fed to rely on private data.

The furlough of Bureau of Labor Statistics staff has indefinitely delayed the release of monthly employment reports.

It is the first time a government shutdown compelled the Fed to adjust monetary policy without full employment data.

If the shutdown continues until December, the next rate-cut decision would be even tougher for the Fed. The Bureau of Labor Statistics isn't collecting consumer price data, which means the central bank won’t have inflation numbers —a key metric.

Powell’s comments sent stocks lower after an initial rally, as traders trimmed the odds of a December cut to 67% from 90%, according to CME Group’s FedWatch.