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The US central bank cut borrowing costs on Wednesday, marking the second rate cut this year amid economic turbulence stemming from the government closure and tariff policies.

Move Comes at Unprecedented Moment for Central Bank

The move to cut the benchmark interest rate by a quarter point to a range of 4% to 3.75% comes at an extraordinary juncture for the central bank. The institution has been under immense pressure to lower borrowing costs even with persistent inflation.

Fed Statement Notes Job Market Shifts

In a announcement, the Fed said that the jobless rate had increased but stays modest. “Job gains have decelerated,” the release reads. “Inflation has moved up and remains somewhat elevated.”

Government Shutdown Hinders Fed’s Job

The continuing federal government shutdown, now one of the longest in American history, has also complicated the Fed’s job. Collection of key economic data has been indefinitely halted as staff at the Bureau of Labor Statistics are furloughed during the shutdown.

Data Gap Impacts Policy Decisions

The Federal Reserve usually studies labor statistics to assess employment trends, including the count of employment gains added to the market and the current unemployment rate. The most recent employment data was published in the beginning of last month, before the closure, and provided a somewhat gloomy overview of the employment scene in August.

The number of positions created to the market in August was down by over 100k since the earlier season, and joblessness crept up to 4.3% – the highest since three years ago.

Private Data Indicate Continued Slowdown

Though BLS was set to release September’s employment data in early October, it suspended its publication once the shutdown began. Private payroll firm a leading payroll processor indicated recently that the business segment eliminated thirty-two thousand positions in last month, a sign that the employment landscape is still decelerating.

“Both the supply and demand for labor has declined significantly,” Fed chair Jerome Powell said earlier this month, a trend he had previously attributed comes from immigration and tariff policies.

Inflation Report Shows Moderate Rise

Though BLS’s jobs report has been suspended, the agency still issued its inflation report for last month that indicated that costs are rising, although slowly. Prices increased three percent over the last year, the highest since January. In April, the annual inflation rate was 2.3%, the minimum it has been since three years ago. The Fed’s target price increase is two percent.