The Federal Reserve announced on Oct. 29 that it would cut interest rates by a quarter-point for the second month in a row – and only the second time since December 2024.

“Available indicators suggest that economic activity has been expanding at a moderate pace,” the central bank’s Federal Open Market Committee (FOMC) stated in its announcement. “Job gains have slowed this year, and the unemployment rate has edged up but remained low through August; more recent indicators are consistent with these developments. Inflation has moved up since earlier in the year and remains somewhat elevated.”

The vote was 10-2, with one committee member preferring a half-point cut and another wanting no change. The target range for the Federal Funds Rate is now 3.75-4 percent.

While the reduction was not surprising, there had been some uncertainty about what the Fed would do, given that inflation has climbed steadily since the spring, from an annualized rate of 2.3 percent in April to 3 percent in September, the Bureau of Labor Statistics (BLS) reported. Costs have not risen at a faster pace since May 2024, when the rate was 3.3 percent.

The softening labor market was likely a significant factor in the Fed’s decision, as the economy added a net of just 107,000 jobs from May through August, according to the BLS. Official job creation statistics for September are not available because of the federal government shutdown that began Oct. 1, but forecasters had expected gains of around 50,000 positions. The unemployment rate, based on August data, is 4.3 percent.

The next meeting of the FOMC is scheduled for December.

“In the committee’s discussions at this meeting, there were strongly differing views about how to proceed in December,” Federal Reserve Chair Jerome Powell said after the October gathering. “A further reduction in the policy rate at the December meeting is not a foregone conclusion. Far from it.”

Markets dipped following the indication from Powell that the Fed might not give the economy another boost this year.

Normally, the Bureau of Economic Analysis would have released in late October its assessment of growth during the second quarter, but, like the unemployment numbers, this economic indicator has not been calculated because of the shutdown. In mid-October, Powell lamented not having the analyses from government economists and statisticians.

“Generally, the private data, the alternative data that we look at, is better used as a supplement for the underlying governmental data, which is the gold standard,” Powell said. “It won’t be as effective as the main course as it would have been as a supplement.”

Members of Congress, meanwhile, appear to have made little, if any, progress toward a resolution of the budget impasse. Although Republicans control both the House and Senate, Democrats have used the Senate’s filibuster rule to block passage of a funding measure and are demanding that the GOP negotiate expired Affordable Care Act (ObamaCare) subsidies. Pressure could be increasing on Democrats, though, as the American Federation of Government Employees labor union on Oct. 27 said, “it’s time to pass a clean continuing resolution and end this shutdown.” In addition, the Supplemental Nutrition Assistance Program (SNAP), which provides food assistance to 41 million people, will run out of funding on Nov. 1.

The Congressional Budget Office (CBO) estimated that the shutdown will knock 1 percent off the annualized gross domestic product (GDP) growth rate in the fourth quarter because of reduced government spending if the shutdown ends by early November. That number would increase to 2 percent if another month passes without a federal budget.

“Real GDP will rebound when federal funding resumes, with most of the forgone output made up in the future,” the CBO stated. “The reduction in output stemming from the time furloughed employees did not work will not be recovered.”

So far, the shutdown does not appear to have had much of an impact on consumers’ views of the economy. The Index of Consumer Sentiment from the University of Michigan’s Surveys of Consumers dipped 2.7 percent from September to October, but the program director said that, in the survey data, “There was little evidence this month that consumers connect the federal government shutdown to the economy.”

The Conference Board’s Consumer Confidence Index slipped less than 1 percent from September to October, with the group’s senior economist, global indicators, saying, “Consumers were a bit more pessimistic about future job availability and future business conditions while optimism about future income retreated slightly.”

“Consumers’ write-in responses were led by references to prices and inflation, which continued to be the main topic influencing consumers’ views of the economy,” the economist said. “References to tariffs declined further this month but remained elevated.”

In the manufacturing sector, confidence remained middling, as the Institute for Supply Management’s Purchasing Managers Index inched up less than 1 percent and, for the seventh straight month – and 10^th month out of the last 12 – remained below the level separating expansion from contraction.

“Regarding output, the Production and Employment indexes improved, though 64 percent of panelists’ comments still indicated that managing head count is still the norm at their companies, as opposed to hiring,” the chair of the institute’s Manufacturing Business Survey Committee said. “Finally, inputs (defined as supplier deliveries, inventories, prices and imports), on net, moved further into contraction territory.”

Existing home sales in September increased 1.5 percent from August, according to the National Association of Realtors.

“As anticipated, falling mortgage rates are lifting home sales,” the association’s chief economist said. “Improving housing affordability is also contributing to the increase in sales.”

The median existing home sales price in September was $415,200, 2.1 percent higher than in September 2024.

Data on housing starts, which is usually compiled by the Census Bureau and the Department of Housing and Urban Development, has not been released since September because of the shutdown.

The Dow Jones Industrial Average closed at 47,632 on Oct. 29, up almost 12 percent for the year. The S&P 500 Index ended the day at 6,890.59, recording year-to-date gains of 17.2 percent.

The dollar on Oct. 29 was trading at 0.86 euros, 0.76 pounds, 153.05 yen and 7.1 yuan.