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Fed Signals End of Quantitative Tightening Amid Liquidity Concerns
29 Oct, 2025
Summary
- Analysts expect Fed to cut rates again, but unsure of future path
- Shutdown's impact on data complicates Fed's decision-making
- Potential for dissent from hawkish Fed officials on rate cuts
As of October 29th, 2025, the Federal Reserve is anticipated to cut interest rates once more, following its previous reduction in September. However, the central bank's outlook on the economy's future is the primary focus, as the ongoing government shutdown has obscured the data landscape.
When the Fed last convened in mid-September, the job market was showing some cracks, and inflation was rising slightly but within reason. While the overall picture hasn't changed drastically, the shutdown's impact on growth has become a significant concern, with a lack of government data making the economic conditions trickier to assess.
The Fed is expected to signal the end of its quantitative tightening (QT) program, which has gradually been removing excess money from the financial system. This move would be a prudent step to ensure ample bank reserves and prevent spikes in short-term interest rates, as liquidity conditions have tightened. However, the timing of this decision, potentially as early as December, remains uncertain.
