The Federal Reserve says it will end quantitative tightening, thus stop shrinking its balance sheet, by December first

The Federal Reserve lowered interest rates by a quarter point on Wednesday, marking its second rate cut in a row as policymakers attempt to stabilize a softening labor market. A month-long federal government shutdown has made assessing the economy more difficult.

The move — widely anticipated on Wall Street — brings the Fed’s benchmark rate down to 3.75% to 4%, affecting borrowing costs for mortgages, credit cards, and business loans. “Risks to employment have increased in recent months,” the Fed said in its statement.

Investors will be closely watching Chair Jerome H. Powell’s press conference at 2:30 p.m. Eastern, looking for signals on how aggressively the Fed may continue cutting rates.

After holding rates steady since January to gauge the effects of President Donald Trump’s trade and immigration policies, the Fed cut rates in September and suggested additional reductions might follow, despite inflation remaining stubbornly high. Officials, however, have grown more anxious about the labor market. Companies including Amazon and UPS announced large layoffs this week, while the ongoing shutdown is further pressuring hiring and affecting contractors.

Trump has repeatedly pushed for deeper cuts to spur the economy and reduce the government’s borrowing costs. Speaking in South Korea on Wednesday, the president again criticized Powell for not moving fast enough, calling him “too late.”

Market expectations currently point to a third rate cut in December, and potentially another in January, though policymakers may proceed cautiously as signs of mild stagflation emerge — elevated inflation alongside weakening employment.

Minutes from the Fed’s September meeting reveal mounting division inside the central bank: some officials questioned whether the last cut was necessary, while another advocated for aggressive reductions. Powell has warned there is no risk-free path.

A prolonged shutdown could complicate the Fed’s decisions. Without access to reliable government data on inflation, growth, and jobs, officials may be forced to set policy at their December meeting with limited visibility. Earlier this month, the Trump administration temporarily recalled a small number of furloughed workers to produce the latest inflation report, but said future shutdown delays could prevent further releases.