October 29, 2025 — at its October meeting, the Federal Reserve’s Board of Governors, led by Chair Jerome Powell, voted to lower the federal funds rate by 25 basis points, marking the central bank’s second consecutive rate cut of the year. The decision was highly anticipated in Washington and reflects growing concern over slowing economic conditions, particularly in the labor market and housing sector.

Recent macroeconomic indicators, including annualized inflation rising to just over 3 percent, played a role in today’s decision to lower the federal funds rate a second time in two months.

The Fed’s move is expected to ripple across the economy, especially through the residential construction sector. Today’s rate adjustment is expected to ease borrowing costs for builders and developers by reducing interest rates on construction loans, land acquisition financing, and other investments tied to residential construction. Mortgage rates are also beginning to soften, with the average 30-year fixed rate declining to roughly 6.21 percent, its lowest level in nearly a year. If sustained, lower mortgage rates could improve affordability and help revive homebuyer demand.

Officials voted 10 to 2 in favor of the rate cut with Fed Governor Stephen Miran supporting a larger 0.5 percentage point cut, and Kansas City Fed President Jeffrey Schmid supporting no move at all. Looking ahead, the next scheduled policy meeting will be held from December 9 to 10.

The full decision statement can be viewed here.

For questions, please reach out to NLBMDA’s Government Affairs Coordinator, Matthew Delaney, at mdelaney@dealer.org.