The Federal Open Market Committee (FOMC) decided to cut rates by 0.25% to a range between 3.75 and 4.00% as the job market becomes more of a concern for policy makers.* Growth signals are less clear. AI-related investments in data centers and other infrastructure are significant drivers for growth and less impacted by interest rate policy. But an extended government shutdown could increase recession risks.
The Fed is flying with limited visibility and still on mission to ease rates amid a weak job market. The downside risks within the job market will likely ensure the Fed will continue to cut rates in December and throughout the next year.
*lpl.com/research