The Fed report

highlights from The FOMC Policy Update
OCTOBER 30, 2025

Yesterday, the Federal Open Market Committee (FOMC) released its statement and held a press conference following the conclusion of its October meeting.

FOMC Policy Updates: Key Highlights

As widely expected, the FOMC lowered the target range for the federal funds rate by 25 basis points to 3.75-4.00% in its second interest rate cut of 2025.
The decision was not unanimous: Fed Governor Stephen Miran voted to lower the target range by 50 basis points for the second consecutive meeting, and Kansas City Fed President Jeffrey Schmid voted to leave the target range unchanged.
The Fed will conclude its quantitative tightening program that began in June 2022 on December 1, 2025.

notable commentary

During his remarks, Chair Powell highlighted that the Fed’s securities holdings have declined by $2.2 trillion and the size of the Fed’s balance sheet as a share of nominal GDP has shrunk from 35% to 21%.
The Fed will continue to allow Agency MBS to run off its balance sheet as principal payments are received, reinvesting the proceeds in Treasury bills. This approach is consistent with its previously signaled goals of holding a portfolio that consists ‘primarily’ of U.S. Treasuries and lowering the weighted average maturity of its Treasury holdings to be more in-line with that of the outstanding universe.
Chair Powell also indicated that reserves were approaching the threshold for ‘ample’ reserve conditions, highlighting increased repo rates relative to policy rates, increased use of the Fed’s Standing Repo Facility (SRF), and an increase in the effective federal funds rate relative to the rate of interest on reserve balances (IORB). These developments were expected and support the Fed’s decision to end balance sheet runoff.
Chair Powell reiterated that the Fed remains in a challenging situation, as tension between its dual mandate goals persists, with inflation risks tilted to the upside and employment risks to the downside. The ongoing federal government shutdown has delayed the release of important economic data, presenting another challenge for the Fed’s data-dependent approach to monetary policy decisions.
Regarding future monetary policy actions, Chair Powell emphasized that FOMC members held strongly differing views and that a December rate cut “is not a foregone conclusion – far from it.” Fed funds futures were pricing in a near-certainty of a rate cut in December, but that probability dropped below 70% following these remarks.

Important Disclosures
This report includes the thoughts and opinions of AGNC Investment Corp. (“AGNC”) and is being shared for informational purposes only and should not be construed as investment advice. Neither the Federal Reserve nor any other third party has contributed to or been involved in AGNC’s preparation of these materials. AGNC does not endorse or adopt the views of the Federal Reserve or any third party.

Investment in AGNC involves risks and uncertainties that may cause future performance to vary from historical results or any forward-looking commentary provided. Please refer to our annual and quarterly reports on file with the SEC and available on our website or at www.sec.gov for more information about AGNC, including material risks, other factors that may affect future performance, and notices regarding forward-looking statements. AGNC disclaims any obligation to update or revise any forward-looking commentary. Stockholders and other interested parties may sign up to receive AGNC’s news, perspectives, and other types of email alerts by clicking the Subscribe link below.