At its October 2025 meeting, the Federal Reserve reduced the federal funds rate by 25 basis points, setting the new target range at 3.75% to 4.00%, aligning with market predictions. This adjustment follows a similar rate cut in September, marking the lowest borrowing costs since 2022. The decision stems from increased concerns about employment risks in recent months, alongside rising inflation which remains somewhat elevated from earlier in the year.
Despite the consensus, there were differing opinions within the Fed. Governor Miran advocated for a more significant reduction of 50 basis points, while Kansas City Fed President Schmid opposed any rate change, favoring stability. The Federal Reserve emphasized its commitment to carefully monitoring new economic information and stands ready to modify its monetary policy approach if emerging risks threaten its objectives. Additionally, the central bank announced it will conclude reducing its aggregate securities holdings by December 1.
