The Federal Reserve convened its two-day policy meeting this week amid a federal government shutdown that has halted the flow of key economic data typically used to guide decision-making. Despite the limited visibility, the Federal Open Market Committee (FOMC) cut its benchmark interest rate by 25 basis points to a target range of 3.75%–4.00%, marking its second consecutive rate reduction following the initial cut in September—the first of the year.Â
The rate decision exposed clear divisions within the Federal Reserve. Two officials dissented, each for different reasons. Stephen I. Miran, who joined the Fed’s Board of Governors last month, favored a larger half-point rate cut, consistent with his position in September. In contrast, Jeffrey R. Schmid, President of the Federal Reserve Bank of Kansas City, voted to keep rates unchanged at the prior target range of 4.00% to 4.25%, underscoring the policy split over how aggressively to respond to evolving economic conditions.Â
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