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46m ago

Fed Cuts Rates Again and Halts Balance‑Sheet Runoff as Powell Tempers December Odds

Powell said a data blackout from the shutdown leaves the next move uncertain.

Japanese national flag hoisted atop of the Bank of Japan headquarters building is seen between traffic signals in Tokyo, Japan January 23, 2025. REUTERS/Issei Kato/File Photo
WASHINGTON, DC - OCTOBER 29: Federal Reserve Chair Jerome Powell speaks during a news conference following a meeting of the Federal Open Market Committee at the Federal Reserve on October 29, 2025 in Washington, DC. For the second straight month, Powell announced a quarter-point cut to the federal funds rate, bringing rates down to a new range of 3.75 percent to 4 percent. (Photo by Alex Wong/Getty Images)

Overview

  • The Federal Reserve lowered the federal-funds target to 3.75%–4.00% with a second 25-basis-point cut of 2025.
  • Chair Jerome Powell said a December reduction is “not a foregone conclusion,” citing missing BLS and other government data.
  • The FOMC voted 10–2, with Stephen Miran favoring a 50-basis-point cut and Jeffrey Schmid preferring no change.
  • Markets reversed after Powell’s remarks as stocks gave up gains, Treasury yields rose, and futures trimmed December cut odds to about 68% from roughly 85%.
  • The Fed will pause quantitative tightening, stopping balance‑sheet runoff with holdings near $6.6 trillion, a shift analysts expect to offer only modest support to risk assets and liquidity.