Expected Fed Rate Cut Probability for October and December 2025

Fed Rate Cut: Federal Reserve Expected to Ease Borrowing Costs by 2025

As expectations for a possible Fed Rate cut by the end of 2025 continue to grow. Currently, Markets are eying Federal Reserve Jerome Powell to deliver a speech tomorrow. It is anticipated that he will drop hints on upcoming interests. Analysts suggested that borrowing costs may be coming down soon, which would allow spending and investment to increase in the U.S.

Federal Reserve Meeting Dates and Details

The Federal Reserve institutionalizes 8 meetings a year, with several remaining meetings in 2025, including the FOMC (Federal Open Market Committee) meetings on October 28–29 and on December 10–11, 2025. 

After fulfilling a 0.25% FOMC rate cut on September 17, 2025, the market anticipates a second following it and a cumulative reduction of about 0.5% total by the end of 2025, citing market data and views put forth from the MartiniGuyYT X account.

Source: X

Expected Fed Rate Cut October 2025

• According to the CME Group calculator and their FedWatch tool, on October 29, 2025, after the FOMC meeting, the Federal Reserve is expected to reduce rates again. 

• The former target usually rests in a range of 4.00 - 4.25%, but the recent probabilities using the FedWatch tool suggest there is a 91.9% chance they will reduce rates to 3.75 - 4.00%, meaning the market expects about a 25 basis points drop. 

• There is only an 8.1% chance that rates will not change, but also no chance they will increase. 

• If the FOMC cuts the rates, it would be continuing with their relatively conservative approach in an effort to balance economic growth and the risk of inflation, while at the same time making borrowing costs slightly cheaper for both businesses and consumers.
  

Source: FedWatch Data

Expected Fed Rate Cut December 2025

For the December 10-11, 2025, Fed meeting, we analyze the expectation of the market as:

• Generally, market estimates mean there is likely a significant lowering in interest. The chances are 3.50 - 3.75% which is roughly 78.8% - a potential reduction of 50-75 basis points. 

• Also, it suggests a 20% chance of a smaller cuts of 3.75-4.00%. 

• The chance of no rates reduction is low, i.e., 1.2%. 

• Analyst MartiniGuyYT states there is a 98.8% chance of a total cut of 0.5% by December, and believes this expectation is already in part from September, plus another anticipated in December.
  

Source: FedWatch official Data

What Could Be Expected After the Sept FOMC Decision?

The most recent rates margin of 0.25%, on September 17, the Fed is cautious of managing both growth and inflation. The market expects the extra reduction outlined above from both the October meeting and the potential December meeting. 

Generally, a Fed rate cuts indicates potential lower borrowing costs and is viewed as a net positive because it helps facilitate both business and consumer investment and spending, and provides a measure of stabilization to financial markets. However, economists who measure consumer spending growth will need to be cautious of inflation if the rate cut overshot its intended goal.

Source: X

Conclusion

It is reasonable to believe that the total interest rates between September and December would not restrain growth for either consumers or businesses. Let’s see what happens in Jerome Powell's speech tomorrow.