Federal Reserve Meeting Statement – October 2025

The Fed reduces rates by another 25 basis points (0.25%)

The Federal Reserve Bank of the United States wrapped up a two-day meeting on October 29, 2025 . The meeting occurred during a prolonged government shutdown that has stretched for nearly a full month and that has resulted in key economic data not being released.

Since the Federal Reserve relies on the government's economic reports to make decisions on whether to modify interest rates, the Fed was faced with tougher choices at its October meeting. Still, the central bank was confident enough in economic trends to follow through on an anticipated interest rate cut.

In fact, by a 10-2 vote, the Fed cut rates by 25 basis points, bringing the overnight lending benchmark target to 3.75% to 4.00% , down from the 4%-4.25% that reflects the Fed's target range before the change. The two dissenting votes came from opposite ends of the spectrum, with Governor Stephen Miran preferring a larger half-point cut and Kansas City Fed President Jeffrey Schmid preferring no rate cut at all.

This cut is the second consecutive rate reduction in 2025, with the first coming just last month in the September meeting. While the post-meeting statement did not provide insight into the committee’s plans for December, further rate cuts are also expected, with the October CNBC Fed Survey revealing that the next two meetings are likely to bring additional reductions in the benchmark rate.

The Fed also announced that it would halt its quantitative tightening program on December 1 and will begin reinvesting the proceeds of maturing debt. The central bank made this decision as a result of recent tightening in the short-term lending market.

Why did the Federal Reserve cut rates in October?

Although the Fed had incomplete data to work with during the government shutdown, enough information was available to give the central bank confidence that a cut was appropriate to fulfill its dual mandate of maintaining low inflation and low unemployment.

While inflation is still above the 2% rate the Fed targets, it has cooled considerably since the post-pandemic inflation surge. The most recent data from the Bureau of Labor Statistics report even revealed that this latest round of price increases were lower than those predicted by economists.

From August to September, CPI showed just a 0.3% increase, while economists polled by Reuters had predicted a 0.4% uptick. This relatively modest change put the annual inflation rate at 3.0% instead of the anticipated 3.1%. Core inflation, which excludes food and energy, also showed a modest 0.2% monthly gain and an annual gain of 3.00%, which was again lower than the 0.3% and 3.1% economists had predicted for these metrics.

This CPI data was available to the Federal Reserve only because the Social Security Administration required the information to calculate the annual Cost of Living Adjustment awarded to retirees and other benefit recipients.

Unfortunately, the shutdown impacted the release of the monthly jobs report that the Fed normally relies upon to assess the state of the labor market.

However, while Federal Reserve Chairman Jerome Powell acknowledged the absence of the data in an October 14 speech, he also made clear that the Fed would be able to consult "a wide variety of public- and private-sector data that have remained available."

Based on these sources, Powell said in the same speech that he believes "the outlook for employment and inflation does not appear to have changed much since our September meeting four weeks ago."

With that earlier data showing an uptick in unemployment and slower payroll growth, it's not surprising that the Fed believes a focus on shoring up the labor market is the primary concern and justifies a drop in rates.

What does this mean for mortgage rates?

Mortgage rates are not controlled or set by the Federal Reserve, and while the Fed can influence the direction of rates, the October cut was expected, so its impact has already been factored in and is unlikely to have a measurable effect on financing costs.

Still, mortgage rates often mirror Fed fund rate trends, and rates can be impacted by similar economic factors to the ones the Fed considers.

This helps to explain why rates have already become more favorable, with Freddie Mac reporting that as of October 23, the average 30-year fixed rate mortgage had declined by eight basis points the week of October 27, hitting the lowest point in a year.

With rates already down so much, in part in anticipation of the October rate cut, no immediate further drop is expected in the wake of the Fed's announcement. However, the government shutdown has put downward pressure on 10-year treasury yields, and that may be a bigger contributing force driving rates down further in the coming days and weeks.

The Fed's decision to end quantitative tightening could also help to drive mortgage rates down as well by improving liquidity and potentially driving up demand for mortgage-backed securities, although the magnitude of the impact remains uncertain.

Those interested in buying homes may still be excited about the Fed's decision to lower rates and halt its balance sheet runoff, and may be hopeful that these choices, combined with the shutdown's impact, could soon make financing more affordable.

However, trying to time rates is difficult, and borrowers are often better off not delaying in hopes of rates hitting a specific target that it may take months or years to hit.

Those who are in a financial position to buy should reach out to a mortgage loan officer to explore options today, especially as rates are down considerably from post-pandemic peaks and refinancing in the future is always possible if rates continue to decline further.

Federal Reserve Meeting Statement – September 2025

The Fed reduces rates by 25 basis points (0.25%)

All eyes were on the Federal Open Market Committee of the Federal Reserve (Fed) on Wednesday, September 17, with most expecting a long-anticipated reduction in the federal funds rate, or the overnight rate at which banks borrow from each other.

The Fed delivered, reducing rates by 25 basis points (0.25%). The vote to lower rates was 11-1, and put the overnight funds rate in a range between 4.00%-4.25%. The lone dissenting vote came from the newest Fed appointee, Stephen Miran, who wanted a larger half-point cut.

A reduction in rates was not a surprise.

While the White House has long been advocating for easing, the Fed has been reluctant to act as inflation has remained stubbornly high in the post-pandemic era. However, several recent data points gave the Fed the confidence to cut for the first time since December.

Let's take a look at the economic conditions that led to this move, and what it means for those interested in buying a home or refinancing an existing mortgage.

Economic factors prompting a rate cut

The Fed meeting came after a week of political headlines, with Miran sworn in on Monday, and courts recently blocking President Trump's attempt to oust Fed Governor Lisa Cook over allegations of mortgage fraud.

Despite the noise, the Fed's focus remained on fundamentals — several of which justified a rate reduction to help sustain spending, including moderating inflation and a cooling labor market.

The U.S. Bureau of Labor Statistics reported that, as of August 2025, the Consumer Price Index for all urban consumers (CPI-U) rose about 2.9% year-over-year, while the CPI for Urban Wage Earners and Clerical Workers (CPI-W) was up about 2.8%. The Fed's target is 2%, and inflation is still above that level. However, the pace appears to be slowing, giving policymakers room to ease without abandoning their inflation-fighting goals.

Signs of a weakening labor market also reduced the risk that rate cuts will overheat the economy, as the Bureau of Labor Statistics reported that unemployment edged up to 4.3% from 4.2%, while job and payroll growth slowed, with just 22,000 jobs added in August.

The Bureau of Labor Statistics also released preliminary revisions showing the U.S. economy added 911,000 fewer jobs than initially estimated through March 2025, while the U.S. Department of Labor reported that seasonally adjusted initial jobless claims rose to 263,000 in the week ending September 6 — the highest level for initial claims since October 23, 2021.

With the Fed's dual mandate including maximum employment along with controlling inflation, these clear signs of a weakening labor market, combined with the mounting recession risk and the fact that many other central banks have already responded to cooling inflation by lowering rates, today's rate cut was all but inevitable.

"Uncertainty about the economic outlook remains elevated," a post-meeting statement read. "The Committee is attentive to the risks to both sides of its dual mandate and judges that downside risks to employment have risen."

What does this mean for mortgage rates?

The Fed does not directly control mortgage rates, which are tied to Treasury bond yields. While Fed actions can influence financing costs, mortgage rates may not fall much further immediately, since markets largely anticipated today's cut. However, the Fed signaled that two more rate cuts are on the way this year, which could help to drive rates further down.

Still, economists expected more rate cuts in 2025 than have actually materialized, so it remains an open question whether the predicted future cuts will occur as anticipated.

Continued uncertainty over tariffs and questions about U.S. fiscal stability could also push treasury yields higher and keep mortgage rates elevated, as could investor concerns that the Fed is shifting focus away from inflation.

While some would-be homebuyers may be disappointed to find the Fed's announced cuts may not result in cheaper borrowing immediately, the fact remains that rates have already become more competitive, and sitting on the sidelines to wait for further declines may backfire if rates actually rise.