October 2025 Fed Meeting: Will There Be Another Interest Rate Cut?

The October 2025 Fed meeting is under global investor scrutiny. Will the U.S. Federal Reserve continue to cut interest rates after its September move? Get the full analysis and market impact report here.

1. Overview of the October 2025 Fed Meeting

The U.S. Federal Reserve's October 2025 policy meeting is scheduled for October 28-29, 2025, with a press conference to announce the official decision in the early hours of October 30 (Vietnam Time). This is considered one of the most crucial meetings of the year, as the Fed faces the difficult balancing act of stabilizing inflation while supporting economic growth.

Against a backdrop of a slowing U.S. economy, a weakening labor market, and increasing political pressures, global investors are intensely focused on this upcoming interest rate decision.

2. Economic Context and Monetary Policy Pre-Meeting

At its previous meeting in September 2025, the Fed cut interest rates by 25 basis points, bringing the federal funds rate target range to 4.00% – 4.25%. This marked the first reduction after a two-year tightening cycle, reflecting the view that while U.S. inflation remained above the 2% target, it had decelerated significantly.

However, in the lead-up to the October meeting, key economic data releases were disrupted by a U.S. federal government shutdown, causing critical reports like the Nonfarm Payrolls and CPI to be delayed. This has placed the Fed in a difficult position, lacking precise data to inform its policy decision.

Furthermore, geopolitical factors and legal risks—such as the lawsuit between former President Trump and Fed Governor Lisa Cook—have added another layer of uncertainty to the markets.

3. Forecasts and Expectations from Experts

According to surveys by Reuters and Bloomberg, a majority of analysts predict the Fed could implement another 25-basis-point cut in the October meeting to support the slowing economy. However, a significant minority believes the Fed will hold rates steady to further assess inflation trends before taking action.

Key Scenarios:

Cut by 25 bps (Probability ~60%)

This is the most anticipated scenario if consumer data and the job market continue to show weakness.

It would help reduce borrowing costs, stimulating spending and investment.

Could lead to a slight depreciation of the USD, boosting gold and equities.

Hold Rates Steady (Probability ~35%)

The Fed may choose a "technical pause" to await more economic data.

Markets could react negatively in the short term if rate cut expectations are dashed.

Cut by 50 bps (Low Probability, ~5%)

This would only occur in response to an economic shock, such as a credit crisis or a sharp GDP contraction.

While stimulating growth, this move could draw criticism that the Fed is "loosening too aggressively."

4. Impact on Global Financial Markets

4.1. Stock Markets

A continued rate cut would provide a strong catalyst for stock prices due to cheaper liquidity. Technology, real estate, and financial stocks are expected to be among the first to benefit. However, if the Fed signals renewed "inflation vigilance," the market could experience short-term volatility.

4.2. Forex Market

Lower interest rates would likely weaken the US Dollar, particularly against safe-haven currencies like the Japanese Yen (JPY) and Swiss Franc (CHF). This could redirect international capital flows toward emerging markets.

4.3. Gold and Commodities

When interest rates are low, the opportunity cost of holding non-yielding assets like gold decreases, potentially pushing gold prices back toward the $2,500/oz level. Similarly, oil and base metal prices would be supported by improved global growth prospects.

5. Impact on Vietnam's Economy

For Vietnam, U.S. monetary policy significantly influences the USD/VND exchange rate, foreign capital flows, and domestic interest rates.

If the Fed cuts rates, pressure on the USD/VND exchange rate would ease, allowing the State Bank of Vietnam (SBV) more room to maintain an accommodative policy.

Foreign capital inflows could return to large-cap stocks (e.g., VN30 basket), attracted by a widening interest rate differential.

The Vietnamese bond market would benefit from lower global yields, reducing fundraising costs for both the government and businesses.

However, domestic investors should remain cautious of risks stemming from U.S. political volatility and the potential for the Fed to reverse course if inflation re-accelerates in Q1/2026.

6. Conclusion: How Will the Fed Act?

The October 2025 Fed meeting has become a global focal point, as its decision will have a ripple effect across financial markets.

Given the current environment, the most likely outcome is a 25-basis-point cut, with the Fed simultaneously emphasizing its "data-dependent" stance.

The most critical factor for investors will be to monitor Chair Jerome Powell's statements during the press conference on October 30, as every word could set the market trend for the final months of the year.

🔎 Frequently Asked Questions (FAQ)

1. Why is the October 2025 Fed meeting so important?
This meeting is critical because it follows the Fed's initial rate cut in the new cycle. Investors are keen to see if the Fed will continue its easing policy or pause.

2. If the Fed cuts rates, will the US Dollar weaken?
Typically, yes. Lower interest rates tend to cause a currency to depreciate as the yield on assets denominated in that currency becomes less attractive.

3. Could the Fed pause its rate cuts in 2025?
Yes, it's possible. If inflation shows signs of reaccelerating or economic data comes in stronger than expected, the Fed could pause to assess the impact of previous cuts.

4. How does this meeting affect Vietnam?
The primary impacts are on the USD/VND exchange rate, foreign capital flows, and stock market sentiment. A Fed rate cut is generally beneficial for Vietnam, as it encourages cheaper global capital flows into emerging markets.