The Fed cut interest rates by 25 basis points in October, marking its second reduction in 2025 after nearly a year without cuts.
The rate cuts are intended to stabilize a weakening labor market, even as inflation remains above the 2% target due to tariff-driven goods prices.
Services inflation remains contained, allowing the Fed to prioritize addressing employment concerns over persistent inflation.
The FOMC showed dissent, with one member favoring a larger cut and another preferring no change, leaving December’s decision uncertain.
Strategists see the possibility of one more cut this year, depending on incoming labor market and inflation data, with further cuts potentially expected in 2026.
