Washington: The Federal Reserve will almost certainly cut its key interest rate on Wednesday and could signal it expects another cut in December as the central bank seeks to bolster hiring.
A cut on Wednesday would be the second this year and could benefit consumers by bringing down borrowing costs for mortgages and auto loans. Since Fed chair Jerome Powell strongly signalled in late August that rate cuts were likely this year, the average 30-year mortgage rate has fallen to about 6.2 per cent from 6.6 per cent, providing a boost to the otherwise-sluggish housing market.
Still, the Fed is navigating an unusual period for the US economy and its future moves are harder to anticipate than is typically the case. Hiring has ground nearly to a halt, yet inflation remains elevated, and the economy’s mostly solid growth is heavily dependent on massive investment by leading tech companies in artificial intelligence infrastructure.
The central bank is assessing these trends without most of the government data it uses to gauge the economy’s health. The release of September’s jobs report has been postponed because of the government shutdown. The White House said last week October’s
inflation figure may not even be compiled.
The shutdown itself may also crimp the economy in the coming months, depending on how long it lasts. Roughly 7,50,000 federal workers
are nearing a month without pay, which could soon start weakening consumer spending, a critical driver of the economy.