The Federal Reserve lowered its benchmark interest rate by a quarter of a percentage point on Wednesday, its second cut this year, amid intensifying pressure from President Donald Trump and ongoing economic uncertainty surrounding the government shutdown.

The Federal Open Market Committee voted 10 to 2 to lower the federal funds rate to a target range of 3.75 percent to 4 percent, a modest adjustment that policymakers said reflects caution about slowing job growth and mixed inflation signals.

The decision follows an identical rate cut in September, and while markets had widely expected another reduction, the central bank’s accompanying statement and Chair Jerome Powell’s remarks made clear that further cuts this year are far from guaranteed.

“A further reduction of the policy rate in December is not a foregone conclusion — in fact, far from it,” Powell told reporters during a press conference. “We remain committed to supporting maximum employment, bringing inflation sustainably to our 2 percent goal, and keeping longer-term expectations well anchored.”

Powell acknowledged the potential for short-term economic strain caused by the government shutdown, now in its third week, but said the Fed does not anticipate lasting damage.

“The shutdown of the federal government will weigh on economic activity while it persists,” Powell said. “But these effects should reverse when the shutdown ends.”

The rate cut came after weeks of public pressure from Trump, who has repeatedly attacked Powell for not lowering interest rates fast enough. The president has dubbed Powell “Jerome ‘Too Late’ Powell” and in September suggested he could face a lawsuit over cost overruns tied to renovations of the Fed’s historic headquarters.

“Jerome ‘Too Late’ Powell must NOW lower the rate,” Trump wrote on Truth Social, accusing the central bank chief of “gross incompetence.”

Powell, appointed by Trump in 2018 and reappointed for a second term in 2022, did not address the president’s comments directly. But in a subtle defense of the Fed’s independence, he said the committee’s decisions are “based on economic data and analysis, not political considerations.”

Two Fed officials dissented from the majority decision. Fed Governor Stephen Miran, a Trump nominee, pushed for a larger 50-basis-point cut, arguing that stronger monetary stimulus was needed to counteract slowing investment and weaker consumer spending. Kansas City Fed President Jeffrey Schmid opposed any reduction, warning that continued cuts could stoke inflation and reduce the Fed’s flexibility later.

Financial markets reacted cautiously to the announcement. The Dow Jones Industrial Average rose nearly 200 points immediately after the decision but slipped back after Powell’s comments about uncertainty surrounding December’s meeting. Bond yields fell, while the dollar weakened slightly against major currencies.

The rate cut also reflects the Fed’s effort to stabilize conditions amid the Democrat-led shutdown, which has furloughed thousands of federal employees and delayed the release of key government data.

Powell said missing economic reports will complicate decision-making ahead of the next policy meeting.

“Without complete data, we have to rely more heavily on private indicators and surveys,” he said.

The White House, meanwhile, claimed credit for the Fed’s decision, with senior officials arguing that Trump’s pressure campaign forced Powell to act.

“The president has been clear from day one — lower rates mean stronger growth,” said one senior administration official. “He’s fighting for American workers and consumers, and the Fed is finally catching up.”

Powell’s term as Fed chair expires in May 2026. Trump has already indicated that he intends to appoint a successor “more aligned” with his economic agenda, signaling potential changes ahead for the central bank’s direction. For now, Powell’s message to markets was one of caution.

“We will continue to make decisions meeting by meeting,” he said, “based on the totality of incoming information and the outlook for the economy.”

Despite the modest nature of Wednesday’s move, analysts said the cut could help ease pressure on credit markets and give businesses some breathing room as Washington grapples with the budget standoff.

But they cautioned that if inflation remains above target, the Fed may face difficult choices in the months ahead.