Federal Reserve Chair Jerome Powell addressed the media in Washington, D.C., following the Fed's decision to reduce interest rates by a quarter of a percentage point on October 29, 2025. The decision came amid internal disagreements among Fed officials on whether a stalling labor market or persistently high inflation posed a greater economic risk, according to minutes released on Wednesday.
While the Federal Open Market Committee (FOMC) agreed on the rate cut, future decisions remain uncertain. The minutes from the meeting revealed skepticism about further reductions in December, despite market expectations. Powell emphasized in his post-meeting press conference that a December cut is not assured.
The minutes highlighted that "several" members considered another rate reduction in December appropriate if economic conditions evolved as expected, though "many" suggested maintaining the current rate for the rest of 2025 might be more suitable. In Federal Reserve terminology, "many" outweighs "several," suggesting a reluctance toward a December cut, although these terms do not reflect the sentiments of the voting members.
Before Powell's comments, market traders expected a December rate cut, with nearly certain predictions. However, after the press conference, these expectations dropped to about one in three, as per CME Group’s FedWatch. The chances of a January cut remain around 66%.
Despite approving a quarter-point cut to a range of 3.75%-4%, the meeting reflected significant differences among officials, who were concerned about a slowing labor market and inflation not meeting the Fed's 2% target. The committee's members expressed varying opinions on whether current policies were too restrictive, with some advocating for additional cuts to stimulate economic growth and others warning against hindering the Fed’s inflation goals.
Prominent division lines included inflation doves like Governors Stephen Miran, Christopher Waller, and Michelle Bowman, favoring rate cuts to support the labor market. In contrast, hawkish figures, such as regional Presidents Jeffrey Schmid, Susan Collins, and Alberto Musalem, opposed further cuts, warning they could delay meeting the inflation target. Moderates like Powell, Vice Chair Philip Jefferson, and New York President John Williams urged patience.
The minutes also noted ongoing discussions about the restrictiveness of current economic policies, and though "most participants" foresee more cuts in the future, their timing remains uncertain.