#OctoberRateCutForecast

Federal Reserve Poised for October Rate Cut Amid Cooling Economy

As of October 23, 2025, financial markets are buzzing with near-unanimous expectations of an interest rate cut by the Federal Reserve at the Federal Open Market Committee (FOMC) meeting set for October 29-30. The prevailing consensus forecasts a modest 25 basis point (0.25%) reduction, which would adjust the federal funds rate from its current 4.00%-4.25% range down to 3.75%-4.00%. This anticipation stems from recent economic indicators signaling a slowdown, such as inflation edging closer to the Fed's 2% target, unemployment climbing to 4.1%, and underwhelming payroll numbers.

Market probabilities underscore this confidence. Tools like the CME FedWatch Tool show odds for the 25 bps cut hovering between 96.8% and 99.9%. Prediction platforms like Polymarket echo this sentiment, assigning a 97% likelihood to a rate cut by meeting's end. Chances of a more aggressive 50 bps cut remain slim at about 1%, while the probability of no change is under 1%.

A Reuters poll of economists reinforces these views, with most predicting the October cut and another possible in December. This move would build on the easing cycle initiated with a 25 bps reduction in September 2025. Looking ahead, further cuts could lower rates to 3.25%-3.50% by the end of 2026, though variables like the U.S. elections and international trade issues introduce uncertainty.

Should the cut proceed as expected, it may bolster riskier investments like stocks and cryptocurrencies through increased liquidity. However, concerns linger over potential delays in economic data due to a looming government shutdown. In preparation, mortgage rates have already dipped to approximately 6.375% by mid-October. Overall, this potential policy shift highlights the Fed's efforts to balance growth and inflation in a softening economy.