Fed Ready to Cut Interest Rates Again: Markets Happy, Dollar Fragile, Gold Uncertain
The United States central bank (the Fed) is expected to lower its benchmark interest rate by another 0.25% (25 basis points) at its FOMC meeting, which ends tonight (October 29, 2025, European time). If this happens, the Fed's target interest rate will fall to a range of approximately 3.75%–4.00%. This would be the second consecutive cut after the first cut last month, and would signal that the Fed is entering a phase of economic rescue, rather than a full-blown inflation-fighting mode.
The majority of global economists and market participants have anticipated this move; a survey showed that more than 100 out of 117 economists expect the Fed to cut interest rates by 25 basis points at its October meeting. Bond traders have even begun betting that the Fed won't stop there; the market is still counting on the possibility of another cut before the end of the year.
The Fed's reason for starting to lower interest rates is simple: the US economy appears to be slowly slowing. Inflation is no longer as severe as it was a few months ago, and the labor market is starting to feel loose. Private sector reports show slowing hiring and rising layoffs, but on the other hand, consumption remains buoyant, especially among high-income households.
For the Fed, this is a tricky situation: they don't want the economy to suddenly collapse, but they also don't want to signal panic. That's why their style is likely to be cautious easing, but they say all decisions remain data-dependent.
Powell will almost certainly emphasize the risks to the job market (the labor force is starting to weaken) rather than discussing inflation, so that the public sees this cut as a measure of economic protection, not a political payoff.
The drama is further fueled by political factors. President Donald Trump has prepared a shortlist of five candidates to replace Jerome Powell as Fed Chair when his term expires next May.
The list includes two current Fed members (Christopher Waller and Michelle Bowman), former Fed official Kevin Warsh, White House economic adviser Kevin Hassett, and BlackRock executive Rick Rieder. With this shortlist made public, Powell is now speaking not only to the market but also to his potential successor, making every word in the upcoming press conference sensitive.
Investors will be reading: Is this just another cut, or the beginning of a series of aggressive cuts toward 3.5% or even lower in 2026? Powell's answer at the podium will have a direct impact on the US dollar, gold, and global stocks tonight. (CP)
Source: Newsmaker.id
