OAN Staff Katherine Mosack
4:31 PM – Wednesday, October 29, 2025
The Federal Reserve cut its benchmark interest rate to its lowest level in three years, effectively lowering the federal funds rate target range by 0.25 percentage point to 3.75%–4.00%.
The move, which was announced on Wednesday, is the second rate cut of 2025 as policymakers seek to bolster economic growth amid slowing consumer spending.
Officials predicted rate cuts in both October and December, but Powell indicated that the government shutdown, which has stopped economic data, could prevent that from coming true.
“There is no risk-free path for policy,” Fed Chair Jerome Powell said, adding that there is “tension” between the Fed’s goals for employment and 2% inflation, with “strongly differing views about how to proceed in December.”
“A further reduction in the policy rate at the December meeting is not a foregone conclusion. Far from it,” Powell continued. “Policy is not on a preset course.”
Advertisement“We haven’t made a decision about December, and you know, we’re going to be looking at the data that we have, how that affects the outlook and the balance of risks.”
However, newly-appointed Governor Stephen Miran dissented from the consensus decision to cut the federal funds rate — instead advocating for a 0.50 percentage-point reduction. The second member to dissent was Jeffrey Schmid, president of the Kansas City Federal Reserve, voicing that he preferred to hold borrowing costs steady.
“What do you do if you are driving in the fog? You slow down,” Schmid said.
Powell also stated that privately collected data shows that little has changed overall for the economy.
“Mortgage rates are more tied to the 10-year [Treasury yield] versus the Fed Funds Rate,” said Stephanie of Hightower Advisors. “That being said, a lower Fed Funds rate should be viewed positive and as a potential stimulus for the economy.”
At a summit in South Korea, President Donald Trump mocked Powell, calling him “Jerome ‘Too Late’ Powell” as he criticized the slow pace of rate cuts. Meanwhile, U.S. markets reacted to Powell’s caution about a December rate cut: the Dow fell about 74 points (-0.16 %), the S&P 500 edged down slightly, and the Nasdaq rose about 0.55 %.
In the bond market, the 10-year Treasury yield climbed to around 4.00 % as investors dialed back expectations for further cuts.
“Given the potential contentious tone behind the scenes when it comes to a December decision, it will be telling to keep an eye out as the quiet period is now over and the committee members make the speaking rounds,” said Jay Woods, chief market strategist at Freedom Capital Markets.
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