Another Fed Cut Fuels Optimism for Year-End

October 29, 2025

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The 25-basis-point cut could help move the industry toward more robust deal activity.

The Federal Open Market Committee has voted to reduce the federal funds rate range to 3.75 to 4 percent—down from the 4 to 4.25 percent range.

The decision to cut the rate by 25 basis points comes as employment growth has slowed and inflation has ticked up from the beginning of the year and remains above its target. One committee member voted to lower the rate by 50 bps, and one voted for no change at all at today’s FOMC meeting. The committee also decided to stop reducing its total securities on Dec. 1.

Despite limited economic data due to the Oct. 1 government shutdown, Federal Reserve Chair Jerome Powell said conditions remained unchanged since September: The labor market is softening, with increased layoffs and less hiring, and inflation is inching upward. As to whether lower rates could lead to increased inflation, Powell emphasized that there is no “risk-free” policy for balancing employment and inflation.

“Data available prior to the shutdown show that growth in economic activity may be on a firmer trajectory than expected,” Powell said in the post-announcement press conference. “The shutdown of the government will weigh on economic activity as it persists, but these effects should reverse after the shutdown ends.”

A resilient economy among tariff concerns

Allan Swaringen, managing director at LaSalle Investment Management and president & CEO of JLL Income Property Trust, said tariffs have had less impact than expected, though uncertainty around trade policy persists. While certain industries and trading partners have felt pressure, he said, the broader economy has proven more resilient.

“The equity market continues to be exuberant and the interest rate environment continues to be stable and trending down,” Swaringen told Commercial Property Executive. “Even without the Fed data, there is still a sense of the U.S. economy marching forward amid the uncertainty.”

Despite limited access to official reports, alternative data sources continue to indicate a strong U.S. economy, according to Kurt Funderburg, chief investment officer for Byline Bank’s wealth management group. He added that housing inflation is easing, providing further signs of stabilization.

“Corporate commentary so far in the third-quarter earnings season has been devoid of recession fears, with concerns over the impact of tariffs notably lower than during the first- and second-quarter earnings seasons,” he shared. “The CPI report last week was tame, with retreating housing inflation helping to offset the impact of tariffs on goods prices.”

More cuts, more confidence

Though Powell shared that Fed policy is not a preset course and another reduction is not predetermined, the industry is bracing for another possible rate cut in December. Many professionals are expecting a future cut to boost confidence across commercial real estate. Transaction volumes are already rising across property types.

“We are beginning to kind of see things shift back to normalization. Lending volume is up 48 percent compared to 2024, and transaction volume is up 19 percent,” noted Joe Biasi, head of commercial capital markets research at Newmark. “We’re not all the way back, but they are seeing momentum, and you see institutional buyers coming back into office in places like New York and San Francisco.”

Noel Liston, managing broker at Core Industrial Realty and Biasi, said that the latest 25-basis-point cut has been priced into the market, so it is already being felt, but another reduction in December could further stimulate CRE activity.

“Tariff-related price increases may still well be coming before the year’s end,” Liston said. “CRE will benefit from sustained lower rates if we see another 25-basis-point reduction to the Fed’s preferred rate at their December meeting, which assumes no or limited price increase for consumers due to tariffs. If we can see commercial rates dip into the upper 5 percentage point range, we should experience rejuvenated interest in transactions for CRE investment properties.”

While the Fed has been cautious in its approach, experts remain hopeful that greater certainty will emerge heading into 2026. Jason Wolf, managing principal at WCRE CORFAC International, said another cut could help strengthen market sentiment.

“We’ll likely see renewed confidence across the commercial real estate market. Lower borrowing costs can help restart stalled deals, improve refinancing options, and make new acquisitions more attractive. Still, the real catalyst will be consistency—one cut alone won’t materially shift fundamentals unless it marks the start of a more predictable easing cycle.”