Fed Cuts Rate, Pauses Runoff, Restarts T-Bill Buys

The Federal Reserve cut its policy rate by 25 basis points to a 3.75%–4.00% range in a 10–2 vote. It said it will restart limited purchases of Treasury bills and pause its balance-sheet runoff to ease emerging liquidity strains. Policymakers made the move amid a federal government shutdown that has suspended key economic data releases, so the Fed dated its view of the unemployment rate to August and said it is relying on “available indicators” and private‑sector data. The decision drew two dissents — Governor Stephen Miran called for a larger cut, while Kansas City Fed President Jeffrey Schmid preferred no cut — and officials signaled a possible further reduction in December while stressing uncertainty because inflation remains elevated even as job gains have slowed. Markets showed modest reactions, with small stock gains, slightly higher Treasury yields and a firmer dollar, and investors continue to price in further easing.