MNI Fed Review-Oct 2025: “Fog” Raises Bar For Next Cut

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EXECUTIVE SUMMARY:

• The Fed’s October 29 policy decisions were more or less as expected, with the Fed funds rate range cut by 25bp for a 2nd consecutive meeting to 3.75-4.00%, and an announcement that quantitative tightening would end imminently.
• However, there was a significant surprise as Chair Powell began the post-meeting press conference by highlighting the FOMC’s divisions on the way forward: "in the Committee's discussions at this meeting, there were 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. Policy is not on a preset course."
• With markets having come into the meeting expecting a follow-up cut in December as nearly a done deal, this led to a sharp hawkish reaction across rates and FX. There are now only ~16bp of cuts priced for December vs 22.5bp (nearly a foregone conclusion) pre-meeting.
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  • MNI View
  • Market Reaction
  • MNI Instant Answers
  • Press Conference Transcript
  • FOMC Meeting Links
  • Policy Statement Changes