The Federal Reserve on Wednesday approved its second straight interest rate cut, a widely expected move that came despite little recent visibility on the economy due to the government shutdown.
In addition to the rate move, the Fed announced that it would be ending the reduction of its asset purchases – a process known as quantitative tightening – on Dec 1. By a 10-2 vote, the central bank’s Federal Open Market Committee lowered its benchmark overnight borrowing rate to a range of 3.75%-4%.
Governor Stephen Miran again cast a dissenting vote, preferring the Fed move more quickly with a half-point cut. St. Louis Fed President Jeffrey Schmid joined Miran in dissenting but for the opposite reason – he preferred the Fed not cut at all.
The rate also sets a benchmark for a variety of consumer products such as auto loans, mortgages and credit cards. The reduction came even though the Fed essentially has been flying blind lately on economic data.
Other than the consumer price index release last week, the government has suspended all data collection and reports, meaning such key measures as nonfarm payrolls, retail sales and a plethora of other macro data is unavailable.
