The Federal Reserve cut interest rates by a quarter percentage point Wednesday for the second meeting in a row, even as the government shutdown has left policymakers without key data to guide monetary policy.
The central bank voted in a split decision to cut its benchmark interest rate to a range of 3.75% to 4.00%. President Trump’s newest appointed governor, Stephen Miran, disagreed with the decision, preferring to cut rates by half a percentage point, while Kansas City Fed president Jeff Schmid also dissented, favoring holding rates steady.
Read more: How the Fed rate decision affects your bank accounts, loans, credit cards, and investments
Miran said ahead of the Fed’s meeting that he was concerned renewed trade tensions with China, which have since lessened, posed risks to the economic outlook. He also said he’d like to cut rates to a neutral setting — a level designed to neither spur nor slow growth — more quickly than his colleagues because he doesn’t see tariffs leading to higher inflation and wants to avoid causing damage to the labor market.
Schmid has said inflation is still too high and the previous level of interest rates was the “right place to be.” He’s cautioned that aggressively boosting demand could raise the risk of an outsized increase in prices as firms gain pricing power and increase the pass-through of tariffs to consumers.
Not since September 2019 have there been dissents on both sides of a Fed interest rate decision.
Read more: How jobs, inflation, and the Fed are all related
To begin its policy statement, the Fed acknowledged the ongoing government shutdown has muddied data collection efforts and prevented officials from having a complete picture of the US economy, noting its assessment of the economy is based on “available indicators.” Later in its statement, the Fed said it “will continue to monitor the implications of incoming information for the economic outlook.”
Since the US government shutdown began on Oct. 1, the September jobs report remains unpublished, and that month’s inflation data was published over two weeks late. The October jobs report, scheduled for release at the end of next week, is likely to be delayed. The White House said October’s inflation report likely won’t be published.
Policymakers indicated in their statement that they don’t see any change in the state of the job market since they stopped getting official labor market data.
“Job gains have slowed this year, and the unemployment rate has edged up, but remained low through August; more recent indicators are consistent with these developments,” the statement read.
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