Fed Rate Cut October 2025: What to Expect Next

Fed Rate Cut in October Is as Good as Done — December Is the Real Battleground

The Federal Reserve appears locked in for another Fed rate cut in October 2025, with policymakers signaling near-unanimous support for a quarter-point reduction. Markets have already priced in the move—but the real story for traders lies in December, when the Fed will have to decide whether to keep easing or pause amid uncertainty from both economic data delays and trade-driven inflation pressures.

October Rate Cut Baked In

After weeks of consistent messaging from Fed officials, futures markets are assigning a near-100% probability to a 25 basis-point cut at the October 28–29 FOMC meeting. The move would bring the federal funds rate down to a range of 3.75%–4.00%, extending the central bank’s pivot toward supporting employment while inflation cools unevenly.

Chair Jerome Powell’s recent remarks were interpreted as an explicit green light for the October cut. Governors Christopher Waller and Michelle Bowman have backed the move, while Stephen Miran, a Trump appointee, has floated the idea of a deeper 50-point cut to accelerate stimulus.

Why December Matters More

The Fed rate cut October 2025 is widely viewed as a done deal, but the path after that remains uncertain. The Summary of Economic Projections released in September showed a split committee: seven members expected no more cuts this year, while others anticipated one or two additional moves. That dispersion keeps the December 9–10 meeting wide open for debate.

Complicating matters is the ongoing government shutdown, which has disrupted critical labor and inflation data from the BLS and BEA. The Fed may have to rely on private payroll trackers and state-level data to gauge the economy’s health.

If the data—when it arrives—show further hiring weakness, a second cut in December becomes likely. But if inflation flares again, especially under the weight of new tariffs, policymakers could argue for a pause.

Political Pressure and Policy Shifts Ahead

Markets are also weighing the political undertones. Fed Governor Stephen Miran’s term expires in January, and with President Trump expected to nominate a new chair to replace Powell when his term ends in May, traders see potential for a more aggressive easing cycle in 2026.

Cleveland Fed President Beth Hammack, known for her hawkish tone, will rotate into a voting seat next year—adding another wrinkle to how the committee balances growth and inflation risks.

Trading Implications

Bonds: Expect yields to continue softening into the October meeting; the 10-year could test support near recent lows if guidance remains dovish.
Financials: Bank stocks may remain under pressure as narrowing net interest margins weigh on Q4 earnings guidance.
Gold and Treasuries: If the Fed hints at a December follow-up cut, safe-haven assets could spike as traders reposition for a softer dollar.
Equities: Growth sectors—particularly tech and AI—may rally on renewed liquidity optimism. Watch for rotation out of defensive names.

Bottom Line

The Fed rate cut October 2025 is all but guaranteed—but what happens in December will define the next phase of market momentum. Whether policymakers cut again or pause will hinge on delayed data, trade tensions, and the evolving political landscape. For traders, the real opportunity lies not in the first move—but in positioning ahead of the second.