FOMC Meeting Tonight: Fed Rate Cut Expected 0.25% Amid Shutdown

October Fed Rate Cut: Powell Faces Data Fog Amid Shutdown & Weak Jobs

The US Federal Reserve is likely to reduce interest rates by 0.25% today, as they have to work through limited economic data due to the long-term government shutdown and increasing worries about the weakness of the job market.

Fed Rate Cut Decision: What's Happening?

The Federal Reserve is set to cut the benchmark interest rate by half a percentage point, and it will be lowered to 3.75%-4.00. This action, which is anticipated at the end of the two-day Federal Open Market Committee (FOMC) meeting, will be a sign in a tightrope walk as it attempts to strike a balance between declining growth in jobs and inflation that remains high.

Source: Reuters

Economists surveyed by Reuters were nearly unanimous in predicting this decision. The rate cut marks a continued effort to sustain economic momentum amid President Donald Trump’s second-term policies and the 29-day U.S. government shutdown, which has delayed key data releases crucial for policymaking.

Why is the Fed cutting Rates?

• The rate cut is primarily driven by a weakening job market.

• The unemployment rate has climbed from 4.0% to 4.3% this year.

• Hiring has slowed sharply, and companies like Amazon have announced the biggest layoffs.

• The foreign-born labor has also decreased, which has worsened the supply of labor, influencing the level of hiring.

Although there is some positive news on inflation, as the Consumer Price Index increased more slowly than predicted in September, policymakers fear that companies will begin laying off workers more actively in case the growth continues to decelerate. This mix of a weakening labor market and tame inflation has forced the federal to further cut the cost of borrowing.

How the Fed is Making Decisions?

• The US government shutdown has created a major data blackout leaving the Fed to make decisions with incomplete information.

• Official September and October jobs reports have not been released.

• Key data on GDP and consumer spending are also missing.

• Policymakers are now relying on state unemployment claims, local business surveys, and private economic models to gauge conditions.

• Fed officials admit they are operating “in a fog,” making it harder to track whether the economy is stabilizing or slipping toward a broader slowdown.

Source: X

What’s Happening Inside the Federal Reserve

• Disagreements within the Fed are expected.

• Governor Stephen Miran may push for a larger 0.5% cut.

• Others, like Vice Chair Michelle Bowman, may oppose halting the balance sheet drawdown, which currently stands around $6.6 trillion.

When Is the Fed Meeting?

The Federal Reserve’s FOMC meeting takes place on October 28–29, 2025. The rate decision will be announced on October 29 at 2:00 PM EDT (11:30 PM IST), followed by Fed Chair Jerome Powell’s press conference at 2:30 PM EDT (12:00 AM IST). The decision will be closely watched for hints about the December policy outlook, especially if the shutdown drags on.

Impact of Fed Rate Cut News on Markets

• Markets are bracing for volatility, especially in crypto and equity sectors.

• Crypto influencers like Lark Davis and Crypto Aman noted that rate cuts often boost liquidity and investor sentiment, fueling bullish rallies.

Source: Lark Davis and Crypto Aman

• Bitcoin, trading near $68,000, has historically surged 20–50% after similar cuts.

• However, analysts warn of short-term swings as traders adjust to shifting liquidity expectations.

• Meanwhile, equity markets perceive the move as a positive step, although it is cautious due to the uncertainty about future inflation and fiscal gridlock.

Other Factors that would impact the Fed Decision.

This is complicated by the current U.S. government shutdown and the impending U.S.-China trade negotiations. A trade breakthrough between Xi Jinping and President Trump may alleviate the situation in the world.

The Quantitative Tightening (QT) is also being rumored to be ended, which would inject up to 500-700 billion dollars into the economy, similar to the prior liquidity injections prior to significant crypto rallies.

Conclusion

The rate cut is an indication that it is finding it difficult to steer the U.S. economy through uncertainty. Having limited information, domestic conflict, and crosswinds around the world, Powell is confronted with his most difficult balancing act ever.