Federal Reserve likely to cut key rate Wednesday and may signal another cut to follow

By CHRISTOPHER RUGABER Associated Press Economics Writer WASHINGTON AP The Federal Reserve will almost certainly cut its key interest rate on Wednesday and could signal it expects another cut in December as the central bank seeks to bolster hiring Related Articles Survey finds inflation slower hiring undermining worker confidence Foreclosures are up Here s why experts aren t worried Economists are realizing the job region is cooling Workers have known it for months Ford thanks Trump as Japan floats buying a fleet of F- trucks Amazon to cut K corporate jobs Tuesday reports A cut Wednesday would be the second this year and could benefit consumers by bringing down borrowing costs for mortgages and auto loans Since Fed chair Jerome Powell strongly signaled in late August that rate cuts were likely this year the average -year mortgage rate has fallen to about from providing a boost to the otherwise-sluggish housing sphere Still the Fed is navigating an rare period for the U S commercial sector and its future moves are harder to anticipate than is typically the event Hiring has ground nearly to a halt yet inflation remains elevated and the financial market s mostly solid improvement is heavily dependent on massive financing by leading tech companies in artificial intelligence infrastructure The central bank is assessing these trends without greater part of the regime statistics it uses to gauge the market system s fitness The release of September s jobs review has been postponed because of the authorities shutdown The White House disclosed last week October s inflation figure may not even be compiled The shutdown itself may also crimp the business activity in the coming months depending on how long it lasts Roughly federal workers are nearing a month without pay which could soon start weakening consumer spending a critical driver of the financial market Federal workers laid off by the Trump administration s Department of Administration Efficiency efforts earlier this year may formally show up in jobs statistics if it is communicated next month which could make the monthly hiring input look even worse Powell has explained that the peril of weaker hiring is rising which makes it as much of a concern as still-elevated inflation As a consequence the central bank demands to move its key rate closer to a level that would neither slow nor stimulate the financial market Most of Fed bureaucrats view the current level of its key rate as high enough to slow rise and cool inflation which has been their main goal since price increases spiked to a four-decade high three years ago The Fed is widely expected to reduce it to about Wednesday WIth job gains at menace the goal is to move rates to a less-restrictive level Kris Dawsey head of economic research at D E Shaw an financing bank reported that the lack of content during the shutdown means the Fed will likely stay on the path it sketched out in September when it forecast cuts this month and in December Imagine you re driving in a winter storm and suddenly lose visibility in whiteout conditions Dawsey commented While you slow the car down you re going to continue going in the direction you were going versus making an abrupt change once you lose that visibility In up-to-date remarks the Fed chair has made clear that the sluggish job territory has become a signficant concern The labor area has certainly softened pretty considerably Powell announced The downside risks to employment appear to have risen Before the regime shutdown cut off the flow of material Oct monthly hiring gains had weakened to an average of just a month for the previous three months The unemployment rate ticked up to a still-low in August from in July Layoffs also remain low however leading Powell and other authorities to refer to the low-hire low-fire job domain At the same time last week s inflation record issued more than a week late because of the shutdown revealed that inflation remain elevated but isn t accelerating and may not need higher rates to tame it Yet a key question is how long the job region can remain in what Powell has described as a curious kind of balance There have been specific worrisome statistics points in the last insufficient months revealed Stephen Stanley chief U S economist at Santander an resources bank Is that a weakening trend or are we just hitting an air pocket The uncertainty has prompted a few top Fed administrators to suggest that they may not necessarily sponsorship a cut at its next meeting in December At its September meeting the Fed signaled it would cut three times this year though its policymaking committee is divided Nine of leaders supported two or fewer reductions Christopher Waller a member of the Fed s governing board and one of five people being considered by the Trump administration to replace Powell as Fed chair next year stated in a latest speech that while hiring facts is weak other figures suggest the market is growing at a healthy pace So something s gotta give Waller stated Either economic enhancement softens to match a soft labor sphere or the labor arena rebounds to match stronger economic expansion Since it s unclear how the contradiction will play out Waller added we need to move with care when adjusting the initiative rate Waller mentioned he supported a quarter-point cut this month but beyond that point it will depend on what the economic figures says assuming the shutdown ends Financial markets have put the odds of another cut in December at above according to CME Fedwatch and Fed officers have so far explained little to defuse that expectation Jonathan Pingle chief U S economist at UBS explained that he will look to see if Powell at a news conference Wednesday repeats his assertion that the risks of a weaker job realm remain high If I hear that I think they re on track to lowering rates again in December he reported