October 30, 2025

In a fiery move to help the cooling labor market, the Federal Reserve has slashed interest rates by a quarter point, bringing the new range to 3.75% - 4%. This marks the second rate cut in a row as worries grow about job growth slowing down and the risks to employment rising. Officials described economic growth as "moderate" but noted that inflation is still "somewhat elevated" since earlier this year. The Fed also announced that it will stop shrinking its massive pile of assets by December 1, aiming to steady the economy amid uncertain times. The Federal Open Market Committee voted 10-2 for this cut. But not everyone agreed! Governor Stephen Miran wanted a bigger half-point slash and dissented again. On the opposite side, Kansas City Fed President Jeff Schmid preferred no rate cut this time, showing how divided the committee is. Fed Chair Jerome Powell hinted earlier that more job losses might be on the horizon, saying that falling job openings "might very well show up in unemployment." Though the slowdown in hiring triggered last month's cut, the Fed remains cautious about cutting too fast because inflation is still above their 2% target. Adding to the challenge, a government shutdown has blocked the Fed’s access to fresh economic data. They had to rely on information "through August," making their job of steering the economy even harder without current numbers on jobs, prices, or spending. Wall Street reacted carefully: the S&P 500 kept its gains, while Treasury yields and the dollar inched higher. Powell is set to hold a press conference to answer tough questions and explain the Fed’s next steps. In short, the Federal Reserve is juggling hot inflation, a shaky job market, and less data—all while trying to keep the economy on a steady path. Will their cautious rate cuts and halting of asset shrinking work? The coming months will tell!

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Tags: Federal reserve, Interest rates, Labor market, Inflation, Economic growth, Asset portfolio,