Fed Cuts Rates Amid Inflation; Market Priced for Rate Cut
Key Takeaways
- Fed cut rates to 2.75%-3% amid inflation, shutdown; Powell cites tariffs impacting inflation.
- Market fully priced for Fed rate cut, expecting 112.7 bps easing through December.
- Microsoft's quarterly sales up 18% to $77.7B, profit up 22%, beating expectations.
- Yen weakens as BOJ holds steady at 152.96 against the dollar.
- Mexico approves tax hikes on sodas, video games, and e-commerce sales.
Top Stories
Fed cuts rates by 0.25% to 2.75%-3% amid inflation, shutdown.
On October 29, 2025, the Federal Reserve lowered interest rates by 0.25 percentage points to a target range of 2.75%-3% due to a softer labor market and inflation risks, with Chair Powell noting tariffs are contributing to inflation at 2.8%.
Market fully priced for Fed rate cut, 112.7 bps easing expected.
On October 29, 2025, the market is fully priced for a Federal Reserve rate cut, with expectations of 112.7 basis points in easing through December.
Microsoft's quarterly sales up 18% to $77.7B, profit up 22%.
On October 29, 2025, Microsoft reported an 18% increase in quarterly sales, reaching $77.7 billion, and a 22% increase in quarterly profit to $30.8 billion, surpassing expectations, excluding a $3 billion investment in OpenAI.
Yen weakens as BOJ holds steady, defying expectations.
On October 30, 2025, the yen weakened against the dollar after the Bank of Japan decided to hold its benchmark interest rate steady, reaching 152.96 against the dollar.
Mexico approves tax hikes on sodas, video games, and e-commerce.
On October 29, 2025, the Mexican Senate approved President Claudia Sheinbaum's tax and revenue blueprint for 2026, including tax hikes on sodas, violent video games, cigarettes, gambling winnings, and e-commerce sales.
Financial Analysis
Dollar-yen options trading volume at one-month low.
On October 28, 2025, dollar-yen options trading volume hit a one-month low as investors delayed positions ahead of the Bank of Japan’s and Federal Reserve’s policy decisions.
Global Economy
Saudi Arabia forecasts 5.1% real GDP growth in 2025.
On October 29, 2025, Saudi Arabia forecast that its real GDP growth would reach 5.1% in 2025, with non-oil GDP growing by 3.8%.
UK invests £55B in science and tech R&D.
On October 29, 2025, the UK government confirmed a £55 billion boost for science and tech research and development, supporting innovation in sectors like clean energy and AI safety.
UK report: AI skills gap could boost economy by £400B by 2030.
On October 29, 2025, Skills England released a report highlighting a major AI skills gap in the UK, estimating that AI adoption could boost the UK economy by £400 billion by 2030.
Alphabet's revenue exceeds estimates, driven by ad and cloud demand.
On October 29, 2025, Alphabet exceeded quarterly revenue estimates, reporting $102.35 billion, driven by strong advertising and cloud demand.
Market Insights
Dow Jones hits intraday high of 48,000 amid Fed rate cut hopes.
On October 29, the Dow Jones Industrial Average surged, briefly hitting an intraday high of 48,000, fueled by anticipation of further Federal Reserve rate cuts. Nvidia's market cap exceeded $5 trillion, while Boeing's stock declined due to poor performance.
Nikkei falls after Powell's cautious stance on December rate cut.
On October 30, 2025, the Nikkei stock average started trading lower after Fed Chair Powell's cautious remarks about a December rate cut, impacting market sentiment.
AMC stocks decline on SEBI's mutual fund charge proposals.
On October 29, 2025, HDFC AMC, Nuvama, and other AMC stocks declined due to SEBI's consultation paper proposing changes to mutual fund charges and increased transparency.
Policy Watch
Fed cuts rates to 4-4.25%, Powell uncertain about December cut.
On October 29, 2025, the Federal Reserve reduced interest rates by 25 basis points to 4-4.25%, but Chair Powell expressed uncertainty about a December rate cut due to economic uncertainties and inflation risks.
New Japanese government expected to influence BOJ monetary policy.
Following the inauguration of the Takachi Sanae administration on October 21, 2025, a survey indicated that 80% of respondents believe the government will influence the Bank of Japan's monetary policy, particularly regarding maintaining easing policies.