Nearly 90% of Market Participants Believe the Fed Will Cut Interest Rates in October 2025

U.S. financial market sentiment shows strong confidence that the Federal Reserve (the Fed) will lower its benchmark interest rate during the upcoming FOMC meeting in October. Based on the latest data, the probability of a rate cut is estimated to reach between 89% and 90%, reflecting heightened expectations among global investors and market participants.

Market Expectations Rise Sharply

According to data from the FedWatch Tool cited by Yahoo Finance, the likelihood of a Fed rate cut at the next meeting stands at around 89%. Meanwhile, Barron’s reported that markets are pricing in nearly a 90% probability of a 25-basis-point (0.25%) reduction at the monetary policy meeting scheduled for October 28–29, 2025.
This projection indicates that the era of high interest rates, which has lasted for more than two years, may be approaching its end as inflation and economic growth in the U.S. show signs of slowing.

Revised Projections from Major Financial Institutions

Market optimism has also been reinforced by the shift in outlook from several major financial institutions. A Reuters report stated that Nomura now expects the Fed to cut rates by 25 basis points in October and once more in December 2025.
Meanwhile, Bank of America (BofA) has revised its earlier forecast—which previously anticipated the first cut in December—and now believes the move will likely occur sooner, in October, citing the weakening U.S. labor market as the primary reason.

The Fed’s Uncertainty and Considerations

Despite strong market expectations, several factors could still influence the Fed’s final decision. One such factor is the disruption in economic data releases caused by a partial U.S. government shutdown, which has delayed key reports on employment and inflation.
Additionally, some Federal Reserve officials, including Chicago Fed President Austan Goolsbee, have cautioned against cutting rates too quickly, noting that inflation in the services sector remains “sticky” and has not yet declined significantly.

Potential Market Impact

If a rate cut does materialize in October, it would serve as a strong signal that the Fed is becoming more comfortable with the ongoing slowdown in the U.S. economy. It would also mark a shift toward a more accommodative monetary policy stance.
Such a move could boost financial market liquidity and increase investor appetite for riskier assets, including stocks and cryptocurrencies. However, the final decision will still depend on forthcoming data regarding inflation, employment, and overall macroeconomic stability before the policy meeting takes place.

With market expectations reaching nearly 90%, the October 2025 FOMC meeting is anticipated to be a pivotal moment that could signal the beginning of a new monetary easing cycle.
Nevertheless, as always, the Fed is expected to remain cautious in balancing its policy objectives — keeping inflation under control while supporting economic growth amid persistent global uncertainties.