Fed Lowers Rates by 25 Basis Points Due to Sluggish Employment, Inflation Setbacks, and Ongoing Trade Uncertainty

Morningstar outlook.>

Analysts from Allianz Research, cited in the Morningstar outlook, expect the U.S. Federal Reserve to lower interest rates by 25 basis points at its policy meeting on Wednesday, October 23, 2025. This move would set the federal funds rate between 3.75% and 4.00%. The anticipated rate cut, which will be followed by a press briefing from Chair Jerome Powell, comes as recent labor market figures have disappointed and inflation data has been delayed by the government shutdown. According to Investors Business Daily, markets have fully factored in this reduction and are predicting another cut in December. LSEG data suggests the policy direction remains steady, even as trade policy uncertainty persists.

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CNBC inflation graphic.>

Due to the shutdown, September’s inflation figures were published late, revealing a 3.0% annualized rate—the lowest in several months. However, economists warn that the effects of tariffs are still unfolding, as illustrated by the CNBC inflation graphic. Current trade policies are estimated to cost the average household $1,800 in 2025. Many companies are delaying price hikes until trade talks provide more clarity. While the Fed’s rate cut may offer short-term relief from inflation, it could leave core inflation measures high as supply chain changes take time to materialize.

Seeking Alpha analysis.>

National Bank Holdings Corporation (NBHC) has projected a steady net interest margin of 3.9% for the rest of 2025, even as it absorbs its $369 million purchase of Vista Bancshares, according to the Seeking Alpha analysis. CEO Tim Laney highlighted robust credit quality and loan expansion, with $1 billion in new loans so far this year. CFO Nicole Van Denabeele expects noninterest income to reach between $15 and $17 million. The acquisition, now 80% finalized, should strengthen NBHC’s presence in Texas and its trust services, though management acknowledged ongoing competition from private credit in the commercial real estate sector.

Investing.com schedule.>

Next week’s economic schedule features important U.S. indicators like crude oil inventories and the UK’s year-over-year CPI for September, both of which could impact market swings, according to the schedule. Investors will also keep an eye on manufacturing and retail sales data, while earnings reports from major tech firms such as Apple, Microsoft, and Amazon may influence market sentiment ahead of the Fed’s announcement.

Global markets will also be watching U.S.-China trade negotiations at the APEC summit in South Korea, where President Trump and Xi Jinping aim to resolve tariff disputes that could spark renewed inflation, as previously reported by Investors Business Daily. At the same time, both the European Central Bank and the Bank of Japan are set to release policy updates, with Japan’s first rate decision under its new prime minister adding further uncertainty to the week.

Investing.com summary.>

According to the summary, investors are also considering the Fed’s longer-term direction, especially as Chair Powell’s term concludes in May 2026. A more dovish replacement could prolong the rate-cutting cycle, potentially benefiting mortgage-backed securities and commercial real estate. However, fluctuations in swap spreads and SOFR suggest that ending quantitative tightening too soon could create funding pressures.