The government shutdown is likely to cement additional Fed interest rate cuts

Core Viewpoint - The Federal Reserve is likely to lower its key interest rate in October due to the ongoing government shutdown and its implications on economic data and the labor market [1][2][3] Group 1: Federal Reserve's Interest Rate Decision - The budget impasse in Washington may solidify the expectation of a rate cut by the Federal Reserve [1][2] - Wall Street experts suggest that the Fed will lean towards easing monetary policy, especially if the government shutdown prolongs [2] - A majority of Federal Open Market Committee officials indicated a preference for two rate cuts instead of one through the end of 2025 [4] Group 2: Economic Concerns - Ongoing concerns regarding the labor market and potential damage from the government shutdown are expected to outweigh inflation worries [3] - Despite cautious language from Fed officials, the likelihood of successive rate cuts remains high due to insufficient labor market reassurance [3] - Most officials believe that temporary inflation impacts from tariffs are unlikely to disrupt the trend of gradual softening towards the Fed's 2% inflation target [4]