Navigating Uncertainty: Insights on the Federal Reserve’s Future Interest Rate Decisions
What’s the Outlook for the Federal Reserve’s Interest-rate Policy?
By Dennis Shen, Chair, Macroeconomic Council, Scope Group
Published: October 28, 2025
At the global financial scene, all eyes watch the Fed move next. Expectations rise for a careful easing of U.S. interest rates. Dennis Shen, chair of Scope Group’s Macroeconomic Council, breaks down the Fed’s decision and sorts today’s monetary forces.
Anticipated Rate Cut as Market Data Softens
Scope Ratings sees the Fed cut rates by 25 basis points at Wednesday’s meeting. Many view the move as a "risk control" step. Recent labor data weakens, and core CPI numbers fall in September.
U.S. financial futures nearly fix the 25-point drop. Fed Chair Jerome Powell’s comments match this view. The following press conference will soon give markets more clues.
The Road Ahead: More Cuts or a Hold?
A further 25-point cut by December sits in many minds, yet the end result is not fixed. If inflation climbs or if the soft labor reading lasts little, some Fed voices may prefer a hold after the next move.
Still, with softer voices holding sway at the Fed, stopping its tightening steps soon comes to mind.
A Divided Institution under Political Pressure
The Fed splits over the inflation target and how to act. Some FOMC members treat the goal as if it now sits at 3% instead of 2%. Their view shows hints from political calls and pressure from the White House for steeper cuts.
Other decision-makers point out inflation has stayed above 2% for more than four years. They warn that moving too fast may shake market trust and risk price stability over time.
Rising U.S. trade tariffs and ongoing price pressures add weight to a careful path. Some worry that extra political input might blunt the Fed’s true role and unsettle market trust in its fight against rising prices.
Economic Strength and Data Limits
The U.S. economy shows strong fight and resolve, yet questions grow about soft labor numbers. A current government shutdown stops the usual release of key numbers. This gap makes choice harder for the Fed.
In such a murky time, Fed voices seem set to stick to their September path until more facts come in. The central bank will use what is known to guide its next step.
US Inflation Remains High
Data from the US Bureau of Labor Statistics and forecasts at Scope tell us that everyday consumer inflation stays well above the Fed’s 2% mark. This clear sign adds to the policy challenge.
Conclusion
The Fed stands at a point where data call for more ease, while risks of extra inflation and political input hang in the balance. The next rate drop seems near, but the path ahead rests on new facts, inflation trends, and shifting politics.
Investors and market watchers will seek signs in the Fed’s remarks and at the press meet to see if more ease comes or if caution wins.
About the Author:
Dennis Y. Shen is the Chair of the Macroeconomic Council and Lead Global Economist at Scope Ratings, based in Berlin, Germany. The Macroeconomic Council joins credit views from sovereign, bank, corporate, and structured finance areas.
For ongoing news on economic data and market forecasts, see FXEmpire’s economic calendar and market analysis sections.
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