The U.S. Federal Reserve on Wednesday, October 29, 2025, cut its benchmark interest rate by 25 basis points to a range of 3.75–4.00 percent, marking its first rate reduction this year as signs of slowing job growth and rising labor market risks emerge.

The decision, approved by a 10–2 vote of the Federal Open Market Committee (FOMC), came amid what the Fed described as “moderate” U.S. economic growth and inflation that remains “somewhat elevated” compared with the start of the year.

However, Federal Reserve Chair Jerome Powell cautioned investors against assuming another rate cut at the next policy meeting in December.

“A further rate reduction in December is far from certain,” Powell said at a post-meeting press conference, as quoted by Bloomberg on Thursday, October 30, 2025.

Powell’s comments quickly reversed earlier market optimism. U.S. Treasury yields and the dollar rose, while stocks retreated, as traders scaled back expectations for additional easing. Interest-rate swap markets now price in roughly a 60-percent probability of another 25-basis-point cut in December, down sharply from over 90 percent before the meeting.

Two Fed members dissented: Governor Stephen Miran favored a deeper 50-basis-point cut, while Kansas City Fed President Jeff Schmid argued rates should remain unchanged.

Powell acknowledged the divide, noting that several policymakers wanted to pause to assess whether labor market risks were materializing or if stronger growth could be sustained.

“When you’re driving in the fog, you need to slow down,” Powell added, referring to limited data availability due to the recent U.S. government shutdown.

Market reaction

In response to the Fed’s move, Indonesia Stock Exchange (IHSG) opened higher on Thursday morning, rising 10.14 points (0.12 percent) to 8,176.36, while the LQ45 Index gained 1.21 points (0.14 percent) to 837.93.

“The IHSG has potential to break above 8,180, but if it fails, a short-term correction may occur since the Fed’s 25-bps cut was already priced in, while uncertainty remains about future cuts,” Head of Retail Research at BNI Sekuritas, Fanny Suherman, said on Thursday, October 30, 2025.

Globally, U.S. and European markets ended mixed on Wednesday, with the S&P 500 flat, Nasdaq up 0.41percent, and Dow Jones down 0.16 percent. In Europe, FTSE 100 gained 0.61 percent, while Germany’s DAX fell 0.64 percent and France’s CAC 40 slipped 0.19percent.

In Asia, regional markets opened cautiously on Thursday. Japan’s Nikkei rose 0.12 percent, Hong Kong’s Hang Seng gained 0.46 percent, while China’s Shanghai Composite edged down 0.10 percent and Singapore’s Straits Times Index lost 0.23 percent.

Domestically, Indonesia’s capital market has maintained strong momentum. As of October 24, 2025, total market capitalization rose 23 percent year-to-date to Rp 15,234 trillion, with average daily trading value up 28 percentyear-on-year to Rp 16.46 trillion.

The Indonesian Stock Exchange (IDX) targets 50 IPOs in 2026, including six major “lighthouse” listings, and expects to add 2 million new investors while maintaining an average daily transaction value of Rp 14.5 trillion.