Fed Signals Possible Rate Cut by Year-End as Inflation Cools

Expectations for a Fed rate cut 2025 have intensified after the U.S. Federal Reserve hinted at a possible easing of monetary policy before the end of the year. Officials cited cooling inflation and slower consumer spending as reasons for the shift in tone. (Reuters)
Recent data showed core inflation easing to 2.7%, its lowest level since 2021, while job growth continued to moderate. The combination has led economists to expect a softer stance from the Fed, particularly after Chair Jerome Powell stated that “monetary conditions are now sufficiently restrictive.” Analysts note that if this trend continues, a December rate cut is increasingly likely.
U.S. Treasury yields fell sharply following Powell’s remarks, with the 10-year yield dropping below 4.2%. Equities advanced modestly, while the dollar index weakened as traders priced in the first Fed rate cut 2025. Futures now indicate a nearly 60% chance of a quarter-point reduction at the year’s final FOMC meeting.
Global investors welcomed the possibility of a Fed pivot, seeing it as potential relief from tight liquidity. A policy shift could ease pressure on emerging-market currencies and boost demand for gold and risk assets. For AI-powered economic analysis and market updates, visit ForexMarketPlace.org.
Disclaimer: Based on Federal Reserve statements and Reuters reports published on October 21, 2025.
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