Fed Cuts Rates by 25 Basis Points: What Should Investors Expect?

Fed Cuts Interest Rates

The Federal Reserve reduced the policy interest rate by 25 basis points to a range of 3.75% - 4.00%, in line with market expectations. This decision emerged as a significant development closely monitored by investors, and the statements from Fed Chairman Jerome Powell have become a matter of curiosity.

Impact of Weak Employment on the Economy

Among the main reasons behind the rate cut are weak employment data. As we approach the last quarter of 2025, this step taken by the Fed to achieve a "soft landing" for the economy was made considering the negative trends in employment. In recent weeks, the stagnation of private sector employment data and an increase in layoffs have influenced the Fed's assessment of market dynamics.

Market Reactions

The rate cut has been observed to lower bond yields and increase volatility in stock and cryptocurrency markets. Investors have increased trading volumes in technology stocks and crypto assets with the expectation of a more dovish Federal Reserve. However, analysts caution that careful attention is needed in this regard.

Expectations for the Future

Analysts working with Oxford Economics express that the priced-in cuts for 2026 are overly optimistic. With the inflation rate still hovering around 3%, they warn that the Fed entering such a rapid easing process could threaten price stability in the medium term.

In conclusion, the Fed's decision to cut interest rates indicates a shift in the direction of monetary policy under the measures taken. The priority now seems to be focused on preserving employment, while market participants expect another 25 basis points cut during the meeting in December.