News October 29, 2025
Fed Cuts Rates for Second Time this Year, But Says a Third Cut in December Isn’t Guaranteed
The cut comes a little over a month after it lowered interest rates by 0.25 percentage points for the first time in 2025.
Key Takeaways
• The Federal Reserve cut interest rates by 0.25 percentage points, lowering the benchmark rate to a range of 3.75%-4% and marking the first time rates have dipped below 4% since 2022.
• A third rate cut in December is now uncertain, despite earlier signals that one might happen before year’s end.
• The ongoing government shutdown is delaying access to key inflation and jobs reports, potentially hindering the Fed’s ability to make informed decisions at its next meeting on December 9-10.
The Federal Reserve is keeping one promise, but may be going back on another.
The Fed announced Wednesday it will cut interest rates by 0.25 percentage points for the second time this year, bringing the benchmark borrowing rate to a range of 3.75%-4%. However, Federal Reserve Chair Jerome Powell noted that despite previous indications of a third cut in December, a third reduction might not happen after all.
“In the committee’s discussions at this meeting, there were strongly differing views about how to proceed in December,” Powell said during a news conference. “A further reduction in the policy rate at the December meeting is not a foregone conclusion. Far from it.”
2022
The last time interest rates were below 4%
The cut comes a little over a month after it lowered interest rates by 0.25 percentage points, when it also signaled a second and third cut before year’s end. Central Bank officials have made Wednesday’s call without access to critical federal economic data on inflation and jobs reports due to the government shutdown. Powell said the Central Bank may not be able to make another rate cut in December until it has more visibility into key government figures. If the government shutdown continues through the end of the year, it could further postpone these cuts.
The announcement marks the first time in three years that interest rates are below 4%, moving the Fed’s policy closer to a “neutral” level. The Fed will meet again to discuss potential further rates on December 9-10.