US Federal Reserve Implements Another Rate Cut
In a widely anticipated move, the United States Federal Reserve, led by Chairman Jerome Powell, has announced a further reduction in the benchmark interest rate by 25 basis points. The decision, revealed on Wednesday, October 29, 2025, brings the target range for the federal funds rate down to 3.75%-4.00%. This marks the second consecutive rate cut by the central bank, reflecting concerns about the evolving economic outlook and a shift in the balance of risks.
The Federal Open Market Committee (FOMC), the Fed's policy-setting body, stated that "uncertainty about the economic outlook remains elevated". While acknowledging that economic activity has been expanding at a moderate pace, the committee pointed to signs of a slowing job market and somewhat elevated inflation. The CPI data showed inflation at 3% for the 12-month period ending in September 2025, up from 2.9% in August 2025.
In its official statement, the FOMC explained that the rate cut was made "in support of its goals and in light of the shift in the balance of risks". The committee emphasized that it will "carefully assess incoming data, the evolving outlook, and the balance of risks" when considering future adjustments to the target range. The Fed also indicated that it would conclude the reduction of its aggregate securities holdings on December 1.
Market analysts had widely expected the 25-basis-point cut, and attention is now focused on Chairman Powell's commentary for further insights into the Fed's thinking. Investors, economists, and global markets are closely scrutinizing his statements regarding inflation, economic growth, and the future direction of monetary policy.
The decision to cut rates was not unanimous. According to the Fed's statement, the committee members voted 10-2 in favor of the reduction. Stephen Miran, a Fed governor, dissented, advocating for a larger 0.50 percentage point cut. Jeff Schmid, president of the Kansas City Fed, preferred no change to the target range.
Speaking at the NABE meeting in Philadelphia, Powell acknowledged that economic activity is slightly stronger than expected but warned of rising risks to employment. He noted that "payroll gains have slowed sharply, likely in part due to a decline in labor force growth". He also indicated that the Federal Reserve could conclude its balance-sheet.
The Federal Reserve's actions come amid increasing debate about the appropriate course for monetary policy. Some policymakers have expressed concerns about the potential for further rate cuts to fuel inflation or create asset bubbles. Others argue that lower rates are necessary to support economic growth and ensure full employment. The Fed is committed to supporting maximum employment and returning inflation to its 2 percent objective.
The US Federal Funds Interest Rate is expected to be 3.75 percent by the end of this quarter, according to Trading Economics global macro models and analysts expectations. In the long-term, the United States Fed Funds Interest Rate is projected to trend around 3.50 percent in 2026 and 3.25 percent in 2027.
