US Fed on track to cut rates again

THE US Federal Reserve is almost certain to cut interest rates for a second straight meeting on Wednesday, and could also shed light on what it will do next.

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Analysts and traders expect most policymakers on the Fed’s rate-setting committee will back a quarter percentage-point cut, which would lower the bank's benchmark lending rate to between 3.75% and 4.00%.

A cut would boost an American economy still digesting the effect of President Donald Trump’s sweeping tariffs, and buy policymakers some more time as they wait for the end of the government shutdown.

Republicans and Democrats remain politically gridlocked almost a month after the start of the shutdown, which has resulted in a suspension of publication of almost all official data.

The Fed has a dual mandate to act independently to tackle both inflation and unemployment, which it does by either hiking, pausing, or cutting its key lending rate.

Lower rates stimulate the economy and the labour market, typically feeding through into lower mortgage rates. Higher rates act to constrain activity and dampen inflation.