FOMC slashed the federal funds rate by 0.25%

 

It has a twin impact opportunity and a sense of caution  

The Federal Reserve has made the following decisions to implement the monetary policy stance announced by the Federal Open Market Committee [FOMC] in its statement on October 29, 2025:  

The Board of Governors of the Federal Reserve System voted unanimously to lower the interest rate paid on reserve balances to 3.90 percent, effective October 30, 2025. As part of its policy decision, the Federal Open Market Committee voted to direct the Open Market Desk at the Federal Reserve Bank of New York, until instructed.  

Otherwise, to execute transactions in the System Open Market Account in accordance with the following domestic policy directive; Effective October 30, 2025, the Federal Open Market Committee directs the Desk to, available indicators suggest that economic activity has been expanding at a moderate pace.  

Job gains have slowed this year, and the unemployment rate has edged up but remained low through August; more recent indicators are consistent with these developments. Inflation has moved up since earlier in the year and remains somewhat elevated.  

The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. Uncertainty

In support of its goals and in light of the shift in the balance of risks, the Committee decided to lower the target range for the about the economic outlook remains elevated. The Committee is attentive to the risks to both sides of its dual mandate and judges that downside risks to employment rose in recent months.  

In support of its goals and in light of the shift in the balance of risks, the Committee decided to lower the target range for the federal funds rate by 1/4 percentage point to 3-3/4 to 4 percent. In considering additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. 

The Committee decided to conclude the reduction of its aggregate securities holdings on December 1. The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective. In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook.  

The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals. The Committee's assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.  

Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michael S. Barr; Michelle W. Bowman; Susan M. Collins; Lisa D. Cook; Austan D. Goolsbee; Philip N. Jefferson; Alberto G. Musalem; and Christopher J. Waller. Voting against this action were Stephen I. Miran, who preferred to lower the target range for the federal funds rate by 1/2 percentage point at this meeting, and Jeffrey R. Schmid, who preferred no change to the target range for the federal funds rate at this meeting.  

By presenting perspective on US Fed Rate Cut; Colin Shah, MD-Kama Jewelry said, “The US Federal Reserve announced its second interest rate cut of the year was on the expected lines. This development creates a scenario of both opportunity and a sense of caution.  

This is because the softening in USD makes it lucrative internationally as institutional investors and Central Banks will ramp up their inventories, along with individual buyers banking on this moment to invest in the yellow metal to safeguard against economic volatility. 

On the other hand, the same factors, along with the INR pressure, will push up local gold prices, which may attract investment buying. Having said that, hurdles like high import costs and high prices will be a matter of concern in decision-making for the buyers.”