US Fed Rate Cut: Jerome Powell Reduces Interest Rates By Another 25 Bps

US Federal Reserve’s latest interest rate decision.

US Fed Rate Cut, US Fed Meeting Latest News: The US Federal Reserve on October 29 reduced its key interest rates by another 25 basis points (bps) to 3.75%-4.00%, in line with market expectations. This is the second consecutive rate cut following the last reduction in September 2025, when the US central bank announced a similar 25 bps reduction after a gap of nine months.

The Federal Open Market Committee (FOMC) approved the rate cut with a 10-2 majority. Governor Stephen Miran dissented, arguing for a steeper half-point reduction, while Kansas City Fed President Jeffrey Schmid also voted against the move, favouring no rate cut at all.

“In support of its goals and in light of the shift in the balance of risks, the Committee decided to lower the target range for the federal funds rate by 1/4 percentage point to 3-3/4 to 4 percent,” the Federal Open Market Committee (FOMC) said in a statement on October 29.

It added that uncertainty about the economic outlook remains elevated. The Committee is attentive to the risks to both sides of its dual mandate and judges that downside risks to employment rose in recent months.

“Available indicators suggest that economic activity has been expanding at a moderate pace. Job gains have slowed this year, and the unemployment rate has edged up but remained low through August; more recent indicators are consistent with these developments. Inflation has moved up since earlier in the year and remains somewhat elevated,” the FOMC stated.

US Fed to Halt Quantitative Tightening from December 1

Alongside the rate cut, the Federal Reserve announced that it will end the reduction of its asset holdings, a process known as quantitative tightening, effective December 1.

The post-meeting statement did not provide any direction on what the committee’s plans are for December.

The next US Fed meeting will take place on December 9-10, and the decision will be announced on December 10.

In September, the US central bank’s officials expected two more cuts this year, according to the ‘dot plot’.

The Fed had reduced borrowing costs three times last year till December 2024. But, it then put any further cuts on hold to evaluate the impact of President Donald Trump’s sweeping tariffs on the economy. The US central bank kept its key interest rates unchanged at 4.25%-4.50% for five times in a row till the previous July 2025 policy review.

Currently, CPI inflation in the US stands at 3%, which was cooler than expected by most analysts. The US Fed targets to bring in the retail inflation rate at 2%.

US Fed Rate Cut: How Will It Impact Indian Markets?

Currently, the Nifty futures (GIFT Nifty) are trading nearly 90 points lower at 26,166, suggesting a gap-down opening on Thursday.

For Indian markets, the US Fed rate cut is positive for sectors like IT, pharma, and other export-oriented industries.