🔗 Share this article Federal Reserve Reduces Borrowing Costs for Second Time This Calendar Year Amid Economic Uncertainty The US monetary authority lowered borrowing costs on midweek, marking the second reduction in the current year amid economic turbulence originating from the government closure and tariff policies. Move Comes at Unprecedented Time for Federal Reserve The move to reduce the key rate by a 0.25% to a span of 4% to 3.75% comes at an unprecedented moment for the Fed. The institution has been under immense pressure to lower borrowing costs even with persistent inflation. Fed Statement Highlights Labor Market Changes In a statement, the Fed stated that the jobless rate had gone up but remains low. “Employment growth have slowed,” the release notes. “Inflation has risen and remains moderately high.” Federal Closure Hinders Fed’s Job The ongoing government stoppage, now among the lengthiest in American history, has also complicated the Fed’s job. Collection of important financial statistics has been indefinitely halted as employees at the BLS are on leave during the shutdown. Information Shortage Impacts Monetary Moves The Fed usually analyzes BLS data to assess employment trends, such as the count of employment gains added to the economy and the current unemployment rate. The most recent employment data was released in early September, before the shutdown, and provided a somewhat gloomy snapshot of the jobs market in the previous month. The number of jobs added to the market in August was down by more than 100,000 since the earlier season, and joblessness rose to 4.3% – the highest since 2021. Alternative Reports Show Continued Slowdown Though the bureau was scheduled to release last month’s employment data in the start of last month, it suspended its release when the closure began. Private payroll firm ADP reported earlier this month that the private sector eliminated 32,000 positions in last month, a sign that the employment landscape is still decelerating. “Supply as well as demand for labor has fallen significantly,” Fed chair the Fed chairman said recently, which he had earlier said stems from immigration and tariff policies. Inflation Report Shows Gradual Rise Though BLS’s jobs report has been suspended, the agency still released its inflation report for last month that showed that prices are going up, although gradually. Prices increased three percent over the last year, the peak since January. In spring, the annual inflation rate was 2.3%, the lowest it has been since 2021. The central bank’s goal price increase is two percent.