Source: Yahoo!Finance
By: Jennifer Schonberger – Senior Reporter
October 29, 2025
The Federal Reserve is widely expected to lower its benchmark interest rate by a quarter percentage point on Wednesday afternoon for the second policy meeting in a row, even as officials have been flying blind without most official government data.
While a cut today is baked in, investors will be listening for clues from Fed Chair Jerome Powell about the future path for monetary policy and whether another cut could be expected in December. Powell is likely to be noncommittal, taking a cautious approach and reiterating that officials will set policy meeting by meeting.
“Powell will do his best to avoid any signaling about the December meeting, neither confirming market expectations nor pushing back against them,” JPMorgan chief economist Michael Feroli said.
Markets are pricing in a roughly 87% chance of another rate cut in December.
Krishna Guha, vice chair of Evercore ISI and head of the global policy and central bank strategy team, said the Fed won’t say anything that substantively challenges the idea that it’s on track to cut rates again in December.
However, Guha added, “we think Powell will lean against the idea (that) this is already a lock and will frame that decision as still cumulatively data dependent.”
Onus is on the data
The government shutdown began Oct. 1, halting the release of the jobs report for September, arguably the most important data needed to decide the future path of monetary policy.
Depending on when the government reopens, there’s a chance that between Wednesday and the next policy meeting on Dec. 10, the Fed could receive three new employment reports, which could significantly change perceptions of the job market — for better or worse.
The only government data in hand is the September Consumer Price Index, which showed inflation cooled slightly in September.
“We are confident the onus of proof is on the data to show clearly why the Fed should not cut again in December,” Guha said, “and with limited available labor data continuing to track soft, DOGE layoffs and shutdown effects coming, and September’s relatively benign inflation report … it is hard to see that occurring.”
Guha said that the Fed would need to see both sustained evidence that the job market is starting to stabilize and some additional cause for concern about inflation to skip cutting rates in December.
On the flip side, central bankers would need to see dire evidence that the labor market is weakening more severely to cut by 50 basis points, he said.
“We think a 50 (basis point cut) in December is a bit more likely than a skip — though 25 is a very solid base case,” Guha said.
In addition to a rate cut today, many on Wall Street are expecting the Fed to announce a definitive end to shrinking its balance sheet.
Powell said earlier this month that the Fed may be approaching the point in the coming months where policymakers can stop their balance sheet runoff, or the allowance of bonds to mature and roll off the Fed’s portfolio, thereby decreasing the size of its balance sheet. Powell noted at the time that some signs have started to emerge that liquidity conditions are gradually tightening, and the committee wants to avoid the kind of strains in money market funds experienced in September 2019.
The interest rate decision comes down at 2 p.m. ET, followed by Powell’s press conference at 2:30 p.m. ET.
