A. M. 
The Federal Reserve cuts rates and faces internal division. The U.S. Federal Reserve (Fed) announced on october 29, 2025, a further cut to its benchmark interest rate, lowering the target range to between 3.75% and 4% for the second time this year.
This decision aims to address the slowdown in the U.S. labor market and persistent inflation, which remains above the 2% target set by the central bank.
In its statement, the Fed acknowledged that “job growth has slowed” and that “risks to employment have increased in recent months”.
The cut was approved by a divided vote, highlighting internal tension regarding the future direction of monetary policy: some governors supported a larger reduction, while others preferred to leave rates unchanged.
Inflation and a lack of data complicate the outlook.
Underlying inflation in september showed a 3% year-on-year increase, still far from the central bank’s target.
Furthermore, the partial government shutdown has limited access to reports essential for decision-making, increasing uncertainty for Fed officials.
The Fed also announced that it will stop reducing its asset portfolio starting december 1, concluding a sale process initiated in 2022 and bringing the bank’s balance sheet to its lowest levels since 2020.
Expectations for the rest of the year: Despite the cuts, the division within the Federal Reserve reflects doubts about the possibility of further reductions before the end of 2025.
If inflation and the labor market do not show clear signs of recovery, the future of US monetary policy could include further surprises.
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