As the Federal Reserve gears up to announce a likely reduction in its key interest rate on Wednesday, the financial world is abuzz with speculation about Chair Jerome Powell’s next moves. This anticipated rate cut will mark the third consecutive reduction, bringing the rate down to approximately 3.6%—a level not seen in nearly three years.

For many Americans grappling with steep borrowing expenses for major investments like homes and cars, these cuts offer a glimmer of hope for some financial relief. However, it’s important to note that while these reductions can influence borrowing costs, mortgage rates are also swayed by broader financial market dynamics.

This week’s Federal Reserve meeting comes at a time of uncertainty, as the government shutdown has resulted in a lack of crucial jobs and inflation data. This leaves the Federal Reserve with less information than usual to guide its decisions. Adding to the uncertainty is the upcoming end of Powell’s term as chair in May. President Donald Trump is expected to nominate a successor soon, someone likely to advocate for lower borrowing costs. However, the new chair may encounter opposition from other Fed officials.

While a rate cut seems imminent, the Fed might also indicate that future reductions, such as during their next meeting in late January, will require a higher threshold than the cuts seen this fall. Historically, after a similar third rate cut in December last year, the Fed held rates steady for several months before making any further adjustments.

Tom Porcelli, chief economist at Wells Fargo, suggests that the Federal Reserve might prefer to delay any additional rate changes until March, giving them time to assess more inflation data. “They would love to take a pass in January,” Porcelli notes, highlighting the desire for a clearer economic picture before making further moves.

The Fed’s 19-member rate-setting committee is deeply divided between those who support reducing rates to bolster hiring and those who’d prefer to keep rates unchanged because inflation remains above the central bank’s 2% target. Higher borrowing costs can slow spending and the economy and reduce price increases.

The government said last week in a delayed report that the Fed’s preferred inflation gauge remained elevated in September, with both overall and core prices rising 2.8% from a year earlier.

The lack of economic data has contributed to the divisions. But by their January meeting, they’ll have up to three months of backlogged reports to consider. If those figures show that hiring has remained weak, or that layoffs have spiked, the Fed could reduce rates again in January.

By contrast, if they show hiring has stabilized while inflation remains elevated, they may hold off on additional cuts for several months.

On Wednesday, the Fed will also issue their quarterly set of economic projections, which include forecasts for where they will set rates at the end of this year and next. Economists expect just one rate reduction next year, as they did in September.

Yet the projections will likely carry much less weight this year, since a new chair will probably push for more reductions. And if the economy weakens, more officials will support reductions.

In an interview with Politico published Tuesday, Trump said “yes” when asked if reducing rates “immediately” was a litmus test for his new Fed chair. Trump has hinted that he will likely pick Kevin Hassett, his top economic adviser.

Hassett has often called for lower borrowing costs, but this week has been more circumspect. In an interview Tuesday on CNBC, when asked how many more rate cuts he would support, Hassett did not give a specific answer and said, “What you need to do is watch the data.”