Federal Reserve Set to Announce Rate Decision on Thursday — Markets Expect a 25 bps Cut
The Federal Reserve will release its latest interest rate decision at 03:00 on Thursday, and markets are widely pricing in a 25 basis point cut, bringing the target range to 3.50%–3.75%. This meeting carries unusual tension, as early signals suggest divergent views within the FOMC, with a few voting members potentially opposing additional cuts.
Due to the government shutdown, several key data points for October are missing, which means adjustments to the SEP and dot plot may remain limited. As a result, traders are shifting their attention from economic projections to a deeper liquidity debate.
One of the biggest focuses is whether the Fed will introduce a Reserve Management Purchase Program (RMP) after balance sheet reduction ends. Bank of America estimates the program could involve $45B/month of short-term Treasury purchases, and possibly up to $60B if MBS reinvestments are included.
If RMP is confirmed, the spotlight of this meeting could move away from the rate path and toward the Fed’s balance sheet strategy, signaling how policymakers intend to stabilize liquidity heading into 2026.