U.S Fed cuts interest rates by 25bps

October 30, 2025 (MLN): The U.S. Federal Reserve has lowered its benchmark interest rate by 25 basis points, bringing it to a target range of 3.75% to 4.00%, in an effort to support a slowing economy amid persistent inflationary pressures.

The move,  on Wednesday, marks the central bank’s second rate cut of the year.

In its policy statement, the Fed noted that job growth has weakened and the unemployment rate has inched higher, though it remains relatively low.

Inflation, meanwhile, has “moved up since earlier in the year and remains somewhat elevated,” the statement said. The central bank also emphasized that “uncertainty about the economic outlook remains elevated.”

The rate reduction was widely anticipated by markets. According to CME FedWatch, which tracks investor expectations for Fed policy, traders had priced in a 97.8% likelihood of a rate cut ahead of the release.

Following the Fed’s decision, major financial institutions   including Goldman Sachs, Citigroup, HSBC, and Morgan Stanley  maintained forecasts for one additional 25-basis-point cut before the end of 2025, after Wednesday’s move. Bank of America Global Research, however, expects no further cuts this year.

At a post-meeting press conference, Federal Reserve Chair Jerome Powell signaled that future rate decisions would depend on economic data, cautioning against assuming another cut is guaranteed.

“We haven’t made a decision about December,” Powell said. “We remain well-positioned to respond in a timely way to potential economic developments.”

The decision comes amid a prolonged U.S. government shutdown, now in its 29th day, making it the second-longest in history.

The shutdown has disrupted the release of key government economic reports, including the September jobs report, originally slated for October 3.

The Consumer Price Index (CPI) was one of the few major data points released this month, showing prices rose 0.3% in September, bringing annual inflation to 3.0%.

With limited economic data and persistent uncertainty, the Fed faces a delicate balance as it weighs the need to curb inflation against the risk of stifling an already slowing economy.

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