The Fed is expected to cut the federal funds rate by 25bps at its October 2025 meeting, bringing its target range to 3.75%–4.00%. A similar cut is expected in September, which would lower borrowing costs to their lowest level since 2022.
Markets will be closely watching the December guidance, although policymakers are not expected to provide significant new insights. The policy backdrop has become increasingly uncertain amid the government shutdown, which has delayed the release of key economic indicators. Among the limited data available, the CPI report showed headline inflation edged up to 3%, while core inflation declined slightly to the same level.
ADP data showed the private sector added an average of 14,250 jobs per week in the four weeks ending October 11, while the Chicago Fed forecast suggests the unemployment rate remained largely unchanged at 4.34% in September. Additionally, traders expect the FOMC to consider halting the withdrawal of Treasury securities from its $6.6 trillion balance sheet. (alg)
Source: Trading Economics
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