The Federal Reserve is set to announce its next interest rate decision on Wednesday and the monetary policy meeting comes as the economy is facing a weakening labor market as well as elevated inflation.
Fed policymakers are widely expected to cut the benchmark federal funds rate by 25-basis-points, lowering the target to a range of 3.75% to 4%. The anticipated rate cut comes after the Fed cut rates by that amount at their September meeting. Markets also expect another rate cut of that size at the Fed's subsequent meeting in December.
The Dow Jones Industrial Average, Nasdaq Composite and the S&P 500 are all sitting at record highs. The Dow closed above 47,000 for the first time on Friday.
The latest inflation data from September released on Friday showed that the consumer price index (CPI) ticked up to 3% year-over-year. The ongoing government shutdown has indefinitely delayed the September jobs report, though data released over the summer showed a slowdown in hiring dating back to this spring – creating a challenging situation for policymakers.
Ryan Young, senior economist at the Competitive Enterprise Institute, told FOX Business that "Three percent inflation is usually high enough for the Fed to consider raising interest rates in order to get inflation closer to its 2% target."