# The Fed is Expected to Approve Another Rate Cut Wednesday. Here’s What Else to Expect
The Federal Reserve is set to conclude its two-day monetary policy meeting today, and markets are bracing for another interest rate cut. With a 96.7% probability of a quarter-point reduction, investors and economists are closely watching Jerome Powell’s announcement and what it signals about the central bank’s future stance on monetary policy.[1][2]
## A Second Rate Cut This Year
The expectation is clear: the Fed will cut its benchmark interest rate by 25 basis points, bringing the federal funds rate down from its current range of 4.00%–4.25% to 3.75%–4.00%.[1][2] If approved, this will mark the second rate cut of 2025, following the Fed’s September decision to reduce rates by the same amount. The move comes as the central bank navigates a precarious balancing act between supporting a weakening labor market and managing persistent inflation pressures.
The probability of this cut happening is remarkably high. According to CME FedWatch, which bases its predictions on 30-Day Fed Funds futures prices, there’s a 96.7% confidence level that the quarter-point cut will be approved.[2] This near-certainty reflects broad market consensus that economic conditions warrant continued rate relief.
## Inflation Data Points to Rate Relief
One of the most compelling reasons for today’s expected cut is the softer-than-anticipated inflation report released on October 24. The Consumer Price Index for September showed that headline inflation rose by just 0.3% and core inflation increased by 0.2%, both coming in below analyst expectations.[1] On an annual basis, the inflation rate came in at 3%, cooler than forecasts and suggesting that tariff pressures have been more muted than many economists anticipated.
This inflation print provided crucial cover for the Fed to proceed with its rate-cutting cycle. As Scott Helfstein, Global X’s head of investment strategy, noted: “Concerns about tariffs driving prices higher are still not showing up in most categories. Nothing in the inflation print should stop the Fed from cutting rates. Yes, prices are higher, but not enough to keep them from helping the economy.”[2]
While inflation remains above the Fed’s 2% target, the trajectory appears to be moving in the right direction, giving the central bank confidence to continue easing monetary conditions.
## The Challenge of a Government Shutdown
This Fed meeting is taking place under highly unusual circumstances. Since October 1, the federal government has been in a shutdown following Congress’s failure to approve new funding measures. This shutdown has created a significant headwind for policymakers by halting the release of critical economic indicators.[1]
The Fed has been deprived of several key data points it typically relies upon for policy decisions. The September employment report remains unreleased, and multiple weekly Initial Jobless Claims updates have been withheld. This represents an extraordinary challenge for a central bank that typically bases its decisions on comprehensive economic data. Fed Chair Jerome Powell acknowledged this complication, stating that “it is fair to say that the outlook for employment and inflation does not appear to have changed much since our September meeting,” while noting that data available prior to the shutdown suggests the economy “may be on a somewhat firmer trajectory than expected.”[4]
Despite this data blackout, the Fed appears confident enough in existing information to move forward with another cut.
## The Dual Mandate Dilemma
The Fed faces an inherent tension between its dual mandate to maintain price stability and promote maximum employment.[5] These objectives are currently at odds. The labor market has appeared stagnant in recent months, with low hirings and low firings, pointing toward the need for rate cuts to stimulate economic activity and job creation. However, inflation, though cooling, remains stubbornly above the central bank’s target.
FOMC members are divided on how to weight these competing concerns. While most view the weakening jobs market as the more pressing issue justifying a rate cut, some members remain more hawkish on inflation. This division was evident at the September meeting, when one member dissented and voted for a larger 50-basis-point cut instead.[5]
## Looking Ahead: How Many More Cuts?
Beyond today’s expected decision, the question of future rate cuts looms large. The Fed’s September dot plot suggested that a median of FOMC members expect the federal funds rate to fall to a range of 3.5%–3.75% by the end of 2025, which would imply two more quarter-point cuts at the remaining meetings this year.[5] For 2026, the median expectation is a further decline to 3.25%–3.5%, suggesting one additional cut.
However, these projections are not commitments. The Fed’s narrow balancing act between supporting employment and controlling inflation means future decisions remain data-dependent. If the job market deteriorates more significantly, the Fed could cut more aggressively. Conversely, if inflation resurges or employment strengthens unexpectedly, the central bank could pause or slow its cutting pace.
## What It Means for You
For consumers and investors, today’s expected rate cut has tangible implications. Lower interest rates can help reduce borrowing costs for mortgages, auto loans, and credit cards. However, they may also compress returns on savings accounts and money market funds. Stock markets have shown mixed reactions to Fed policy shifts, while bond markets typically benefit from rate cuts.
As the Fed navigates the remainder of 2025 and beyond, the committee’s willingness to continue cutting rates will depend heavily on incoming economic data—assuming such data becomes available once the government shutdown concludes. Until then, today’s decision will provide the market with a crucial signal about the Fed’s confidence in the economic outlook and its commitment to supporting both employment and price stability.
Original source: CNBC Business – The Fed is expected to approve another rate cut Wednesday. Here’s what else to expect