CB Views: October 2025 FOMC Preview

Scenario 

Probability 

Assessment

Hawkish Cut (-25bp)

15%

• We expect the Fed to meet expectations and cut by 25bps
• However, if chair Powell signals during the press conference that they are not in a position to cut multiple times in a row (as is priced into markets), that would constitute a hawkish cut
• Market Implication: Stocks would take their cue from the rates market. If rates participants were banking on QT ending, and if the Fed signals it’s too early to tweak QT and cuts will slow from here, it would trigger a risk-off reaction and DXY rally

Dovish Cut (-25bp)

35%

• The only real difference between an uber dovish cut and dovish cut will come down to if they announce the end of QT.

Uber Dovish Cut (-25bps)

Base Case

50%

• There will be no economic projection updates so the initial focus will be on the statement’s macro assessment. Official data has been offline but alternative data continues to point to further weakening and the Fed should sound cautious.
• As per the next slide, if they change QT, it will be announced at the same time as the release of the FOMC statement at 2pm.
• Market Implication: Swap spreads would widen further here, the dollar weakens – this is the most bullish scenario for risk