NEW YORK (NewsNation) — The Federal Reserve is lowering interest rates by 0.25 basis points, it announced Wednesday. It comes as inflation remains stubborn but the job market also faces perils as big companies announce layoffs.

Further complicating matters, government data has been limited in October because of the federal shutdown, but Fed Chair Jerome Powell said they could see things remained similar from the month before.

“Conditions in the labor market appear to be gradually cooling and inflation remains slightly elevated,” Powell said Wednesday after the decision.

Powell also said tariffs are driving up prices in some categories. He added it was reasonable to theorize that it would be a one-time price bump, but it is not guaranteed.

“That is a risk to be assessed and managed,” Powell said.

Investors expected the Fed to cut rates for the second time this year, given the slowing job market. Given the lack of statistical updates, analysts said Fed officials may opt for caution.

A new University of Michigan survey showed consumer confidence continues to fall under the strain of inflation. Confidence is down to 53.6%, the survey found, down 1.5 points from last month and nearly 17% from a year ago.

Inflation ticked up in September

The September consumer price index report showed inflation accelerated, but the results still came in a tick better than expected.

As a result, Wall Street has priced in nearly a 100% chance of a 0.25% rate cut on Wednesday.

“Overall, if they cut the market may move a tiny bit, and depending on what he says afterwards, that might move things a little bit up or down,” said Stephen Kates, a financial analyst for Bankrate. “But overall, we’re going to have a pretty tame response. If they don’t cut, the market will sell off, probably to the tune of 1% or more.”

Economists are focused on what Powell says about the data used for this decision, as well as indicators of another cut in December.

What a rate cut means for consumers

For consumers, a rate cut brings lower borrowing costs on car loans, mortgages and credit cards. It’s intended to stimulate the economy and ease financial pressure.

Cheaper borrowing can also encourage businesses to invest and expand, creating jobs and potentially lowering unemployment, which rose above the 4.0% target in August — a key indicator the Fed would likely cut rates.