Fed cuts interest rates by a quarter point but Powell suggests move may be last of 2025

A divided US central bank lowered interest rates on Oct 29 and Federal Reserve chairman Jerome Powell signalled it may be the last cut of the year, especially if the lack of official data during the ongoing government shutdown continues to shroud the true state of the economy in uncertainty.

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Speaking at a press conference after the end of a two-day policy meeting, Mr Powell said the decision by the central bank’s Federal Open Market Committee to reduce its benchmark interest rate by a quarter of a percentage point was a “solid” endorsement of easing policy to help support a gradually cooling labour market.

But he offered a note of caution about what lies ahead.

“In the committee’s discussions at this meeting, there were strongly differing views about how to proceed in December,” Mr Powell said, adding that “a further reduction in the policy rate at the December meeting is not a foregone conclusion. Far from it, policy is not on a preset course”.

The rate cut drew dissent from two policymakers, with Fed governor Stephen Miran again calling for a deeper reduction in borrowing costs and Kansas City Fed president Jeffrey Schmid favouring no cut at all given ongoing inflation.

The announcement included a nod to the data limits the central bank faces as a result of the government shutdown, a point Mr Powell made repeatedly in his press conference.

“We're going to collect every scrap of data we can find, evaluate it and think carefully about it. And that’s our job,” Mr Powell said. “If you asked me could it affect the, you know, the December meeting, I'm not saying it’s going to, but yeah, you could imagine that. You know, what do you do if you're driving in the fog? You slow down.”