OCTOBER 20, 2025 – – FED ON TRACK TO LOWER RATES NEXT WEEK
Fed Chair Jerome Powell spoke at a conference last week where he expressed concerns about inflation and the weakening labor market. The central bank is trying to balance the two areas which call for competing policy steps. Inflation is increasing gradually, while supply and demand in the labor market have declined quite sharply.
Powell also addressed the end of its campaign to shrink its portfolio of treasury securities it used to provide stimulus during the pandemic. They have been passively reducing their asset portfolio since 2022 by allowing securities to mature without replacing them.
The market expects the Fed will lower rates by 25 basis points next week at their regularly scheduled meeting. Powell did not say anything to discourage that idea.