A rate cut. Spoiler alert.

That’s the short version. And there really isn’t a “long” version of an October 2025 FOMC preview. The Committee’s going to cut rates by 25bps this week and that’s pretty much that.

The outcome of this month’s policy gathering was never in doubt even before the BLS released inflation data for September. So it wouldn’t be accurate to say the benign read on core price growth “sealed the deal.” A quarter-point move on Wednesday was assured. But the relatively favorable figures from the BLS did make a December cut incrementally more likely, even as that too was all but a foregone conclusion.

There was nothing in the CPI data to argue against the Fed delivering on the 50bps of additional rate cuts tipped (however narrowly) by the September dot plot refresh, and because any official government macro data the Committee’s lucky enough to receive between now and the December meeting will be viewed with more than a little skepticism given shutdown distortions, that readout carries a lot of weight.

Note also that the Fed’s now inclined to prioritizing the employment side of the mandate, so even if the inflation data wasn’t favorable, their bias is to cut to protect the labor market and preempt job losses. Policymakers are flying without the benefit of the BLS jobs data, which means relying in part on ADP’s tally. Even there, the Fed may not have the same level of access they once did.

Recent media reports suggest ADP paused its years-old collaboration with the Fed over the summer after Chris Waller nodded to the high frequency data in a footnote while making the case for lower rates. Although the Fed’s access to that data — which is different from the monthly ADP release — is no secret, the company appears to have chafed at Waller’s mention which, however subtly (it was buried in a footnote), might’ve been construed as front-running.

According to Wall Street Journal “Fed whisperer” Nick Timiraos, Jerome Powell “has attempted to persuade ADP to restore the data sharing” to no avail. “The loss of the data could take on new significance” given the government data blackout, Timiraos went on, adding that Powell in 2019 mused publicly about the possibility that the ADP data “could have alerted policymakers to economic deterioration sooner than government figures” during the financial crisis.

As a reminder: The last monthly ADP release showed private sector hiring was negative on net for a second month and a third in four. The next update is due November 5.

It’s likely that Stephen Miran will dissent again in favor of a 50bps cut at this week’s FOMC meeting. No one on the Committee will care because everyone understands that Miran’s just there to remind policymakers that Donald Trump “needs and expects” rate cuts just like he needed and expected loyalty from Jim Comey. Creepily, there’s a sense in which Trump’s now in the room at the Fed, watching through Miran’s eyes.

Although the September decision made it clear that no one other than Miran’s prepared to vote for half-point reductions, Waller and Miki Bowman are generally seen as aligned with Trump, and the Committee has other doves too. So I’d expect this week’s cut to be accompanied either by a very slight dovish tweak to the statement language, a relatively conciliatory tone from Powell in the press conference or both.

That said, Powell’s pretty adamant about sticking to the meeting-by-meeting characterization of the Fed’s decision calculus, and he’s emphatic that policy’s not a “preset course.” He’s generally free to state as much publicly without being too concerned about the market reaction because traders understand that in fact policy is on a preset source considering Trump’s determination to commandeer the Board by hook or by Cook. (Get it? It’s not a great joke, but it’s ok.)

It’s possible the Fed will call an end to QT on Wednesday. I’d give that even odds. There are nascent signs of stress in short-term funding markets, and with bank reserves now well below the $3 trillion line, the debate among people who debate such things has shifted from whether we’ve slipped below the “abundant” threshold to whether we’re now in danger of breaching “ample” too.

Any way you cut it (apologies for the cringeworthy pun), this week’s Fed decision should be doubly dovish, or maybe even triply so. Of course, that means the bar to clear for Powell’s high, and with inflation still running a full percentage point above target, it’s possible he’ll happen into the “wrong” turn of phrase, to the detriment of priced-to-perfection equities. Not that it’ll matter. Competition for so-called “dip alpha” is so fierce that a 0.5% down day for the S&P is seen as an obvious buying opportunity.