Powell Warns Against Premature Rate Cuts: Analyzing FOMC’s Diverging Views Amid Economic Uncertainty
Fed Chair Powell Urges Caution on Future Rate Cuts Amid Uncertainty and FOMC Division
October 29, 2025 – Washington, D.C. – Federal Reserve Chair Jerome Powell warns of too-quick hopes for more rate cuts. He notes that the economy stays uncertain and FOMC members split on the issue. After the policy meeting, Powell made clear that while easing borrowing costs is in place, another cut—especially by December—is not a sure thing.
Recent Rate Cut and Market Reaction
On Wednesday, the Fed cut its target rate by 25 basis points. The new range is 3.75% to 4.00%. Many in the market expected this move. At first, U.S. equity indexes rose and Treasury yields climbed a bit because of the shift in policy.
Soon after, Powell said the decision on future cuts stays open. He used simple words: a December cut is “not a foregone conclusion.” His words signaled clear split opinions within the FOMC. This leaves investors and decision makers with a tougher path forward.
Balance Sheet Reduction to Halt Next Month
In another policy change, the Fed tells us that it will stop its balance sheet reduction on December 1. For some time, the Fed has shrunk assets by about $2.3 trillion. This brings total holdings to $6.6 trillion. The central bank seeks to avoid harm from too much tightening in liquidity, especially after hints of trouble in funding markets.
Soon, when mortgage-backed securities mature, the Fed will reinvest payments into short-term Treasury bills. This step shows a careful plan to keep market liquidity steady.
Mixed Economic Signals Amid Data Challenges
The FOMC now sees the economy in a slightly better light. They note that economic activity grows at a steady pace. Powell backs this view by citing strong consumer spending that came before some data issues.
However, job numbers tell a different story. The Committee points out that job gains slow down and warns of more risks to employment. Price rises also remain a worry. Even though the year-over-year CPI eased to 3.0% in September, it stays above the set 2% goal.
The current government shutdown worsens the situation. It cuts the supply of new economic data. With less real-time data, the Fed has more difficulty in their decision path.
Inflation and Tariff Pressures Continue
Price rises do not come only from changes in energy costs. Past tariffs still affect the market. These factors mix to form the challenge of keeping prices low while the economy grows.
Market Outlook: Cautious Optimism
While Powell’s words add some doubt about the immediate rates, the overall view stays supportive. Ending the balance sheet cuts, steady economic growth, and a strong stock market keep a mild positive view for now.
For now, those who invest should watch job numbers and price changes closely. With less new information coming in over the next weeks, the decisions at the December meeting will depend on updated data and the views of the committee.
About the Author
James Hyerczyk is a U.S.-based technical analyst and educator. With over forty years of experience in market analysis and trading, he studies chart patterns and price movement. He writes guides and educational content for traders in futures and stock markets.
Disclaimer: The text above serves to inform and educate. It is not advice on buying or selling. Readers should do their own research and speak with qualified advisors before making any financial choices.
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