The Fed cut interest rates slightly on Wednesday to steady the economy amid a weakening job market, as a long government shutdown has clouded its view of the economy.

Federal Reserve Chairman Jerome Powell said that a lack of key data due to the government shutdown will cause the central bank to be cautious until it has a clearer view of the economy.

The Fed's monetary-policy makers are working to figure out the economic impact of the Trump administration's tariffs, and a key factor on that front is the size of the import taxes levied on Chinese products.

Wednesday’s decision brings the Fed’s key rate down to about 3.9%, from about 4.1%. The central bank had cranked its rate to roughly 5.3% in 2023 and 2024 to combat the biggest inflation spike in four decades. Lower rates could, over time, reduce borrowing costs for mortgages, auto loans, and credit cards, as well as for business loans.

"Today, the Bank lowered the policy interest rate a further 25 basis points, bringing it to 2¼%. This was our second straight cut, and reflects ongoing weakness in the economy and contained inflationary pressures. "Today we also published our outlook for the Canadian economy.

Fed Chair Jerome Powell said the U.S. economy is growing at a slower pace this year. Powell said the Fed staff sees economy growing at a 1.6% annual rate, down from a 2.4% rate in 2024. "We've still got an economy growing at a moderate pace,

The Federal Reserve is expected to cut interest rates by a quarter of a percentage point at its policy meeting on Wednesday, to a target range of 3.75%-4.00%. That would follow a quarter-point cut in September,