FOMC Expected to Lower Rates by 25 Basis Points, Focus on Next Meeting

02:47 PM EDT, 10/28/2025 (MT Newswires) -- The Federal Open Market Committee is widely expected to lower the rate for its federal funds rate target to 3.75% to 4.00% from the current 4.00% to 4.25%, putting the focus on any changes to its post-meeting statement and comments from Federal Reserve Chairman Jerome Powell.

Currently, the CME's FedWatch Tool sees a 97.8% chance of a 25-basis point rate reduction and a 2.2% chance of no change.

The FOMC's statement following Wednesday's meeting is due to be released at 2:00 pm ET, with Federal Reserve Chairman Powell's press conference scheduled to begin at 2:30 pm ET.

With no update to the Summary of Economic Projections at this week's meeting, the wording of the statement and Powell's comments will be key.

Since the September meeting, Fed officials have suggested that another rate reduction at this week's meeting is likely, but opinions on the timing of further rate reductions, as well as the size of those cuts, have been diverse.

In a speech on Oct. 14, Powell said the Fed will continue to act as needed and not on a preset path after other officials had offered support for the median estimate of two further rate reductions this year seen in the SEP in September. He also suggested the FOMC may approach the point where it can stop its balance sheet runoff "in the coming months" but did not commit to an exact end date.

The federal government shutdown has left the FOMC without much of the key data that it relies on to make decisions, especially as its focus has shifted toward the weakening labor market.

Fed Governor Christopher Waller suggested on Oct. 16 that after a 25-basis point reduction at the October meeting, the FOMC should move carefully due to the lack of data.

Fed Vice Chair for Supervision Michelle Bowman, in a speech on Oct. 14, called for two more rate reductions this year due to the slowing labor market and consumer spending.

The newest Fed governor, Stephen Miran, who dissented at the September meeting in favor of a larger 50-basis point rate reduction, said that he would likely seek a 50-basis point rate cut again at the October meeting. He said that he believes rates should be at least 100 basis points lower than they currently are as protection against trade-related shocks.

Markets will focus on the outlook for the next FOMC meeting in December, trying to pull from the statement and Powell's comments any changes that could be driven by these diverse views.

Currently, there is a 88.9% chance being priced in for a further 25-basis point rate reduction at the Dec. 9-10 meeting that would take the range to 3.50% to 3.75%.

In addition, the FOMC is likely to follow up on comments from Powell's Oct. 14 speech that the drawdown of the Fed's securities holdings will come to an end in the coming months. The FOMC is expected to give more details on the timing and process for ending that runoff at this week's meeting.

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