Today's News: Federal Reserve Cuts Interest Rates Amidst Government Shutdown Uncertainty

Fed Chair Jerome Powell indicated that a further rate cut in December is “not a foregone conclusion” due to “strongly differing views” among policymakers and the ongoing government shutdown.

Terrence Dorsey

Oct 30, 2025

Photo: Jim Lo Scalzo/EPA

Date: October 29, 2025
Summary: The Federal Reserve lowered interest rates for the second time this year, setting its benchmark lending rate to a range between 3.75% and 4%. This decision was primarily aimed at countering a weakening labor market. However, Fed Chair Jerome Powell indicated that a further rate cut in December is “not a foregone conclusion” due to “strongly differing views” among policymakers and the significant challenge posed by an ongoing government shutdown, which is obscuring crucial economic data and making it difficult to assess the true health of the economy.

Sources

Key Points

The Federal Reserve implemented its second quarter-point interest rate cut of the year, bringing the benchmark rate to 3.75%-4%, the lowest in three years.
This decision was primarily driven by concerns over a weakening labor market, characterized by slowing job growth and recent layoff announcements from major companies.
Fed Chair Jerome Powell explicitly stated that a further rate cut at the December meeting is “not a foregone conclusion,” citing “strongly differing views” among policymakers.
The ongoing government shutdown is significantly impairing the Fed’s ability to accurately assess the economy’s health, as crucial government data on employment and inflation is unavailable. Powell likened this situation to “driving in the fog.”
Internal divisions within the Fed’s policy-setting committee were evident, with dissenting votes calling for both larger cuts and no change to rates.
Persistent inflation, which remains above the Fed’s 2% target and is partly attributed to President Donald Trump’s tariffs, continues to be a complicating factor.
The Fed also announced its decision to conclude its three-year process of shrinking its balance sheet by December 1.

Unique Highlights

CNN: Notes the specific dissenters, Fed Governor Stephen Miran (backed a larger cut) and Kansas City Fed President Jeffrey Schmid (preferred to hold steady), highlighting that this is the first time since 2019 there were dueling dissents. It also mentions that the September Consumer Price Index (CPI) was released despite the shutdown for Social Security’s cost-of-living adjustment.
NBC News: Points out that stock markets have reached record highs, fueled largely by an artificial intelligence investment boom, with chipmaker Nvidia becoming the first company valued at $5 trillion. It also cites Luke Tilley, chief economist at Wilmington Trust, describing President Donald Trump’s tariffs as “the biggest tax increase since the late 1960s.”
The Washington Post: Details President Donald Trump’s repeated attacks on Powell and his push for dramatically lower rates, including his attempt to fire another sitting Fed governor and deriding Powell as “too late” while speaking in South Korea. It also highlights the Fed’s quiet adjustments to the political climate, such as shelving diversity/climate initiatives and ordering staff cuts.
The Wall Street Journal: Provides specific market reactions to Powell’s comments, including the Dow Jones Industrial Average falling 0.2%, the S&P 500 ending nearly flat, and the Nasdaq Composite rising 0.5% to a new record high. It also details the Fed’s plan to replace maturing mortgage-backed securities with short-term Treasury bills as part of its balance sheet management.
Fox Business: Emphasizes Powell’s determination that the central bank will continue its work despite the data blackout, stating, “We’re going to have to do our jobs one way or the other.” It also reports that the shutdown is in its “fifth week” and is the “second longest in U.S. history.”

Contrasting Details

Inflationary Impact of Tariffs: While all articles acknowledge tariffs as a source of inflation, there’s a nuance in their immediate impact. CNN states that “so far, inflation hasn’t surged due to new tariffs” thanks to businesses absorbing costs, but expects “some additional increased inflation” to come. In contrast, NBC News, The Washington Post, and The Wall Street Journal more directly link tariffs to current persistent or increased inflation, with NBC News noting price growth “ticked up to its highest point since January” and The Washington Post stating inflation is “fueled partly by Trump’s tariffs.”
Severity of Labor Market Weakness: Articles consistently describe a weakening labor market, but Powell’s interpretation, as reported, offers a slightly less alarming view than some data points. CNN and NBC News quote Powell saying he doesn’t see “significant deterioration” or “weakness in the job market accelerating,” attributing some slowdown to changes in immigration and workers leaving the labor market. However, The Washington Post presents more stark figures, noting unemployment rose to 4.3% in August (highest since October 2021) and job growth stalled with only 22,000 positions added in August, implying a more pronounced deterioration. The Wall Street Journal further delves into the debate of whether the slowdown is due to fewer people seeking jobs or reduced demand for workers, indicating differing perspectives on the underlying cause.

The Newsie Project uses AI to summarize, compare, and contrast the reporting of the major US and world online news sources.

This is an evolving project. Tools, approaches, and output formats will change over time. The Newsie Project does not attempt to provide a definitive capsule of any news story. While the incidence of errors in these summaries is low, and I attempt to spot-check details, AI tools can hallucinate. Please click through and read the articles for details (some may be paywalled).

The Newsie Project