US Fed Likely to Cut Rates by 25 Basis Points on October 29

The US Federal Reserve is poised to announce a significant interest rate decision on October 29, 2025. Following its last meeting in September, where it lowered the benchmark rate by 25 basis points to a range of 4.00% to 4.25%, expectations are building for another cut. This anticipated move reflects the central bank’s strategy to navigate current economic conditions while keeping inflation in check.

Several economic indicators suggest that the Federal Open Market Committee (FOMC), led by Jerome Powell, is considering a further reduction of 25 basis points. Market analysts and financial experts believe this decision will be influenced by the recent easing of inflation to approximately 3%, alongside a slowdown in job growth and cautious business sentiment resulting from the recent government shutdown.

Market Reactions and Predictions

According to Harshal Dasani, Business Head at INVAsset PMS, a rate cut this week could signify the beginning of a “synchronised policy easing phase.” This shift could lead to a repricing of various asset classes, including equities, bonds, and commodities. Dasani noted that several Fed officials have indicated a preference for a gradual easing cycle, acknowledging that while inflation remains above the 2% target, disinflation trends are becoming more evident.

“A cut this week would further lower U.S. yields, potentially softening the dollar and reviving capital flows into emerging markets such as India,” Dasani explained. He emphasized that the current futures data reflects strong expectations for this decision, with market participants largely anticipating another rate cut by December.

Financial markets appear to be pricing in these potential changes. The US stock indices reached record highs during the previous trading session, indicating optimism among investors. Market expert Avinash Gorakshakar also supports this view, stating that the equity markets have largely accounted for the expected rate cut. “There is a growing possibility that the US Federal Reserve may cut the benchmark interest rate by 25 basis points in the upcoming policy following the recent decline in inflation,” he remarked.

Future Outlook

If the Federal Reserve proceeds with the anticipated cut, the target range would adjust to 3.75% to 4.00%. This adjustment would mark the second consecutive reduction after the September cut, aligning with the Fed’s shift towards supporting economic growth in light of moderating inflation and a cooling labour market.

Dasani concluded that all eyes are now on Jerome Powell and the Federal Reserve’s outlook for interest rates in 2025. “Markets are fully pricing in a 25-basis-point rate cut at its policy meeting concluding on October 29, which reflects a broader sentiment about the direction of economic policy,” he stated.

As the situation unfolds, investors and analysts will be closely monitoring the outcomes of this critical meeting. It is advisable for individuals to consult certified financial experts before making any investment decisions, as the opinions expressed are those of individual analysts and do not necessarily reflect the views of the publication.