Fed Chairman hints at final rate cut in 2025

On October 29, the US Federal Reserve (Fed) cut interest rates by 0.25 percentage points as expected by investors, but Chairman Jerome Powell hinted that this could be the last rate cut by the US central bank this year.

US Federal Reserve (Fed) Chairman Jerome Powell at a press conference in Washington, DC, announcing the Fed's decision on interest rates, July 30, 2025. Photo: THX/TTXVN

Speaking at a press conference after the conclusion of a two-day policy meeting, Mr. Powell said the decision by the Fed's Federal Open Market Committee (FOMC) to cut its benchmark interest rate by 0.25 percentage points was a "solid" support for easing policy to support a cooling labor market. However, he also sounded a cautious note about what lies ahead.

“In the committee’s discussions at this meeting, there were very different views on whether to lower rates in December. Policy is not on a pre-determined path,” Mr. Powell said.

The rate cut was met with opposition from two policymakers, with Fed Board of Governors member Stephen Miran again calling for deeper cuts in borrowing costs and Kansas City Fed President Jeffrey Schmid advocating against rate cuts due to ongoing inflation.

The Fed's rate cut announcement also addressed data constraints the US central bank faces due to the government shutdown.

"We're going to collect all the data we can find, evaluate it, and weigh it. And that's our job. If you ask me whether that will affect the December meeting, I'm not saying it will, but yes, you can imagine that. If we're driving in fog, we're going to have to slow down," Powell said.

The Fed's current policy rate is 150 basis points below its 2024 peak and in a range that at least some policymakers feel is "neutral," he said, adding that there is growing talk that perhaps it is time for another cycle of rate cuts.

Mr. Powell said inflation would likely rise temporarily in the coming months due to the Trump administration's import tariffs, but would then decline.

The political stalemate between Republicans and Democrats has lasted nearly a month since the government shutdown, leaving most official economic data unreleased.

The Fed also announced that it would end its balance sheet reduction policy on December 1. The Fed's balance sheet expanded during the early stages of the COVID-19 pandemic and has been shrinking in recent years.

The balance sheet decision will leave the US central bank's total holdings of about $6.61 trillion unchanged month-on-month as of December 1, but will transform the portfolio by reinvesting proceeds from maturing mortgage-backed securities into Treasury bills.

Mr. Powell said the Fed would continue to expand reserves at some point, but would also work to shorten the duration of its securities holdings to better match the number of bonds outstanding in the Treasury market.

The 10-2 decision to lower the policy rate to a range of 3.75% to 4% was widely seen by investors as a way for the Fed to contain any further deterioration in a jobs market that policymakers fear may be losing momentum.

US stock indexes fell after comments from Fed Chairman Powell about the possibility of a pause in interest rate cuts in December and traders and investors reduced earlier predictions of another rate cut in 2025.

Source: https://baotintuc.vn/thi-truong-tien-te/chu-tich-fed-am-chi-ve-dot-ha-lai-suat-cuoi-cung-cua-nam-2025-20251030095154710.htm