Fed Balances Rate Cuts Against Shutdown-Driven Economic Uncertainty

The Federal Reserve faces a complex decision as it prepares for a likely 25-basis-point rate cut amid limited economic visibility caused by the ongoing U.S. government shutdown. Delayed data releases on employment and inflation complicate forward guidance. Economists at Goldman Sachs and Nomura expect another cut before year-end, though officials remain cautious about sending dovish signals prematurely. Market liquidity remains tight under quantitative-tightening conditions, suggesting any rate adjustment could have amplified effects across Treasury and credit markets.