On Sept. 17, at 2:30 on the dot, Jerome Powell stepped to the podium for the sixth time in 2025 after the conclusion of a two-day Federal Reserve monetary policy meeting.

Except this time, things were different. Instead of explaining to reporters from prominent news outlets why the Fed held interest rates steady, the chairman of the world’s largest central bank was instead tasked with detailing why the Federal Open Market Committee (FOMC) cut the benchmark federal funds rate by 25 basis points.

For months, Powell had preached patience, cautioning that the uncertain inflationary impacts of the Trump administration’s tariff policies made it prudent to take a wait-and-see approach. But a slowdown in the U.S. labor market necessitated the September rate cut, Powell explained, deeming it a “risk management cut.”

“There are no risk-free paths now,” Powell said at September’s post-meeting presser. Translation: Faced with both rising inflation and a weakening labor market, the Fed deemed stimulating the economy the more pressing concern in its dual mandate of facilitating maximum employment and maintaining 2% inflation over the long run.

The Fed finds itself in a similar predicament ahead of the October FOMC meeting, which begins Tuesday, with the rate decision announced Wednesday.

A surprise consumer price index inflation report from the Bureau of Labor Statistics (BLS) — released Oct. 24 despite the ongoing government shutdown — showed that consumer prices rose at an annual rate of 3% in September, a full percentage point above the Fed’s target.

And while BLS staff haven’t been recalled to produce September’s Employment Situation Summary, private data from The Carlyle Group estimated the U.S. added just 17,000 jobs last month.

Fed rate cut predictions

First American Senior Economist Sam Williamson thinks the lack of official government data about the underlying health of the labor market “could spark more disagreement among [FOMC] members, with some advocating for a pause and others pushing for a larger cut to hedge against downside risks.”

But with the FOMC not reconvening again until December, “October’s decision carries added weight,” Williamson said in commentary provided to Scotsman Guide.

“Markets have priced in a cautious cut, viewing it as a risk management move that preserves flexibility until clearer signals emerge,” the First American economist noted. He added that if the government shutdown drags on, “it would further cloud the outlook and complicate the committee’s decision set, even as market expectations remain confident about another cut in December.”

At the September FOMC meeting, newly installed Fed Governor Stephen Miran dissented, preferring a larger half-point rate cut. Melissa Cohn, regional vice president of William Raveis Mortgage, thinks it’s unlikely the broader committee gets on board with a jumbo rate cut this time around.

“The last thing in the world that the Fed wants to do is to create runaway inflation again,” Cohn commented. “These measured, quarter-point rate cuts are meant to not surprise the markets.”

Michele Raneri, vice president and head of U.S. research and consulting at credit reporting agency TransUnion, also anticipates a quarter-point rate cut. She noted that “while mortgage rates don’t always move in lockstep with the Fed’s target rate — often pricing in anticipated future cuts — the continued easing of monetary policy may well push rates even lower.”

“This presents a tangible opportunity for consumers,” Raneri added. “For example, a new homebuyer securing a $350,000 mortgage at a 6.75% interest rate could potentially see monthly payments drop by nearly $150 from peak highs with another 25-basis-point reduction. Over time, such savings can significantly ease household budget pressures.”

The futures market is overwhelmingly predicting a rate cut of 25 basis points this week. As of Monday afternoon, the CME FedWatch tool, which tracks fed funds futures prices, pegged the odds at 97.3% that the FOMC will vote for a quarter-point cut.

But Yuval Golan, founder and CEO of the real estate investment financing platform Waltz, isn’t convinced an October rate cut is a done deal.

“One thing we do know is that Powell and others at the Fed have approached inflation with caution, trying to walk a tightrope of keeping the economy moving without overheating it,” Golan said. “It’s possible that they pause and reflect as the government figures out its budget and surfaces more economic reports.”