The Federal Reserve cut interest rates on Wednesday for a second time this year, despite officials having only a partial view of how the economy is faring because of the government shutdown.
The central bank voted to lower borrowing costs by a quarter of a percentage point as the lapse in funding for the government stretched into its fifth week. Until lawmakers reach a deal, the Bureau of Labor Statistics and other agencies have stopped collecting, analyzing and publishing official statistics tracking the jobs market, consumer prices, spending and a range of other metrics.
Wednesday’s decision brought interest rates below 4 percent for the first time since late 2022. But it was a divisive vote, with two officials dissenting for different reasons. Stephen I. Miran, the newest member of the Fed’s Board of Governors, voted for a larger, half-point reduction, like he did in September. Jeffrey R. Schmid, president of the Federal Reserve Bank of Kansas City, wanted the Fed to instead hold interest rates steady at the previous level of 4 percent to 4.25 percent. This is the first time Fed officials have dissented in opposite directions since September 2019, when the committee voted to cut rates by a quarter point.
Wednesday’s split underscores the challenge the Fed faces going forward as it looks toward its next meeting, in December, and whether to cut a third time this year, as most officials had previously forecast.
Jerome H. Powell, the Fed’s chair, said that there were “strongly differing views about how to proceed in December” and that a cut was “far from” a foregone conclusion.
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