The Fed could cut interest rates for the second time this year at its upcoming meeting.

The US Federal Reserve (Fed) is expected to announce a second interest rate cut this year at its meeting on October 29, although the US economic outlook remains unclear due to the government shutdown.

Headquarters of the US Federal Reserve (FED) in Washington, DC Photo: THX/TTXVN

The Fed's October meeting comes as a weeks-long standoff between Republicans and Democrats over health care benefits continues, halting the release of most official economic data.

Under the US Congress 's mandate, the Fed has a dual mandate of controlling inflation and ensuring full employment, through adjusting its benchmark interest rate. Without these key indicators, Fed officials are forced to make interest rate decisions without full data as usual. Analysts and investors expect the Fed to cut interest rates by another 0.25 percentage points, bringing the key lending rate to 3.75-4.00%, and may not reveal much about the final cut of the year, expected in December 2025.

The lack of official information complicates the debate within the Fed over whether to cut rates quickly to support a weakening labor market or maintain a tightening stance when inflation remains above its long-term 2% target. Consumer prices have been pushed up in part by high trade tariffs imposed by the Trump administration on major trading partners.

In an interview on October 26, Finance Minister Scott Bessent expressed confidence that inflation will cool down in the coming months.

The only significant economic data released since the government shutdown on October 1 was the consumer price index (CPI), which rose 3% in the 12 months to September 2025 — slightly below forecasts. This news sent financial markets soaring, with stock indexes hitting new records.

Although the Fed uses a different measure to track inflation, data before the shutdown also showed it was still significantly above its 2% target. On the other hand, the job market is slowing sharply, with only 22,000 new jobs created in August 2025, even though the unemployment rate remains at a record low of 4.3%.

KPMG chief economist Diane Swonk predicts the Fed will continue to cut two more times this year and may end its quantitative tightening program next week, in response to rising liquidity risks.

Source: https://baotintuc.vn/kinh-te/fed-co-the-cat-giam-lai-suat-lan-thu-hai-trong-nam-tai-cuoc-hop-sap-toi-20251027104244050.htm