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Fed Cuts Rates Again, Plans to End QT as Powell Cools Expectations for December Move

A government shutdown has created a data blackout that is pushing policymakers to slow their pace of easing.

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)
Bank of Japan Governor Kazuo Ueda attends a press conference after a BOJ policy meeting in Tokyo, Japan, October 30, 2025. REUTERS/Kim Kyung-Hoon

Overview

  • The Federal Reserve lowered the federal funds target to 3.75%–4.00% with a second straight 25 bp cut, the lowest level in three years.
  • Jerome Powell said a December reduction is “not a foregone conclusion,” and futures-implied odds for another cut fell from roughly mid-80% to about 68–70% as stocks erased gains and Treasury yields rose.
  • The decision featured split votes, with Governor Stephen Miran favoring a larger 50 bp cut and Kansas City Fed President Jeffrey Schmid preferring no change.
  • The Fed said it will stop shrinking its balance sheet in December, with holdings down to about $6.6 trillion from near $9 trillion in 2022, a shift some strategists expect to have only modest market impact.
  • Missing BLS and other official releases during the shutdown has complicated policy and global markets have repriced, with other central banks leaning cautious and Indian equities sliding as the dollar strengthened; the next Fed meeting is Dec. 9–10.