Ahead of Fed: 25bp cut; foggy guidance, QT in view

• Markets price 25bp cut to 3.75%–4.00% range fully
• Guidance likely limited as data gaps from shutdown
• CPI headline 3%, core 3%; inflation mix eases tone
• Jobs proxies steady; ADP adds 14,250 weekly on avg
• QT pause debate grows as $6.6t balance sheet looms

The Federal Reserve is widely expected to deliver a second straight 25bp cut today, taking the funds rate to 3.75%–4.00%, the lowest since 2022, while keeping forward guidance deliberately sparse.

Bloomberg’s decision-day guide highlights a likely quarter-point move and scant signaling as officials remain divided on the path ahead. MarketWatch notes volatility has faded as bonds price the cut and a gentle easing path, with attention building on whether QT could be dialed back.

Reuters frames the meeting as happening “in a fog,” thanks to a government shutdown that has delayed key releases, pushing policymakers to lean on partial reads and nowcasting. Futures still imply another trim by December, but officials may avoid pre-committing.

Against that backdrop, the limited data flow shows headline CPI at ~3% with core easing to ~3%, while private sector hiring averaged 14,250 per week in early October. Market participants expect a follow-up reduction into year-end, even as officials keep options open.