Federal Reserve Cuts Rates Amid Government Shutdown, Data Blackout

On October 29, 2025, the U.S. Federal Reserve cut its key interest rate by 0.25 percentage points to a range of 3.75% to 4%, marking the second consecutive reduction this year amid concerns over a slowing labor market and economic uncertainty. This decision was made during a prolonged government shutdown that severely limited access to official economic data, complicating the Fed's ability to make fully informed policy choices. The rate cut aims to stimulate economic activity by lowering borrowing costs, but some Fed members expressed differing views on the pace of future cuts, reflecting internal debate over balancing inflation risks with economic support. Despite inflation remaining somewhat elevated at about 3%, the Fed prioritized risks of an economic downturn, especially as job growth slowed and unemployment slightly increased. President Donald Trump criticized Fed Chair Jerome Powell for perceived delays in rate cuts and is reportedly considering replacing him, raising concerns about political interference in the Fed's independence. Market reactions were mixed, initially buoyed by expectations of the cut but later tempered by uncertainty over the Fed's future moves and the ongoing data blackout due to the shutdown.