Fed to Cut Rates by 0.25% Despite Missing U.S. Data

The U.S. Federal Reserve is expected to lower its benchmark interest rate by 0.25% on Wednesday. The decision comes even though officials have had little fresh data to assess the economy, due to the ongoing government shutdown.

This would be the third rate cut of the year, continuing the Fed’s effort to support growth while inflation remains under control. Traders have already factored the move into prices, with most predicting a small cut rather than a pause.

Fed Acting Without Full Economic Picture

Normally, the Fed bases its policy on detailed government data covering jobs, inflation, and spending. This month, most of those reports are unavailable. The lack of information has left policymakers relying on private estimates and older numbers.

Private payroll data suggests job losses slowed in October after a weak September. Wage growth remains flat, showing that hiring has yet to regain strength. Meanwhile, new consumer price data shows inflation at 3% compared with a year earlier — still above target but moving lower.

With inflation easing and growth cooling, a modest rate cut is seen as a way to keep borrowing costs stable for businesses and households.

Powell to Speak After Decision

The Fed will announce its decision at 2 p.m. Eastern time. Chair Jerome Powell will address reporters 30 minutes later. He is expected to explain how the central bank is managing policy without its usual flow of data and whether more rate cuts are likely this year.

President Donald Trump has continued to call for faster and deeper cuts. Economists remain divided — some believe further easing is necessary to prevent a slowdown, while others say it could eventually push inflation back up.

Market Response and Investor Mood

U.S. markets remain steady ahead of the announcement. Major indexes are close to record highs, helped by strong corporate earnings and expectations of cheaper credit. Apple briefly crossed a $4 trillion valuation on Tuesday, a sign of continued investor optimism.

Bond markets show similar expectations. Yields on U.S. Treasuries have already dropped in anticipation of looser policy. Traders are watching December closely, when another small cut may be possible if inflation stays soft.

Uncertain Months Ahead

The lack of official data means the Fed is operating with less clarity than usual. Analysts say the central bank will likely proceed cautiously until regular reporting resumes.

Even a small rate cut could help support confidence and keep credit conditions stable, but the overall direction of the economy will become clearer only once the missing data returns.

Also Read: Trump-Appointed Fed Governor Miran Calls for Interest Rate Cut to 2.5%