JUST IN: Despite Complications from Government Shutdown, Fed Cuts Rates to Lowest Level in Three Years

AP Photo/Alex Brandon

The Federal Reserve dropped interest rates again Wednesday, despite complications caused by a data blackout during the government shutdown.

As reported by The Wall Street Journal, the Fed made a quarter-point cut in the benchmark short-term interest rate, lowering it to a range between 3.75% and 4%, “the lowest setting in three years and down from a peak of around 5.4% that the central bank maintained for much of last year.”

The rate drop was viewed as an effort to combat damage caused by a recent slowdown in hiring. Numerous major U.S. companies have announced large layoffs this month.

The vote was approved 10-2, with Kansas City Fed President Jeffrey Schmid voting no because he wanted the rate to remain the same, and Fed governor Stephen Miran voting no because he wanted a half-point, not quarter-point cut.

As usual, the debate over cutting rates — a move President Donald Trump has loudly supported — is tempered by concerns about inflation, which is currently at almost 3%. Inflation has been above the Fed’s target of 2% for several years now and reversed its decline in the wake of the new tariffs Trump has imposed.

The ongoing government shutdown has “robbed” the Fed of several reports monitoring jobs, inflation, and other economic indicators, making the task more complicated, the Journal’s report noted. Depending on how long the shutdown continues, the lack of data may make further rate cuts less likely.

Still, the confirmation of a rate cut gave the markets a modest boost, CNN reported with the Dow Jones up 0.25%, the S&P 500 up 0.15%, and Nasdaq up 0.5%. Treasury yields also nudged upwards Wednesday, with the two-year yield trading at 3.52% and the 10-year yield around 4.01%.

This is a breaking news story and has been updated.