Citibank Cuts Base Lending Rate to 7% as Fed Pushes for Growth
Citibank has just announced a fresh rate cut that’s catching the attention of financial markets and borrowers alike. The bank revealed on October 29, 2025, that it will lower its base lending rate from 7.25% to 7.00%, effective October 30. This move comes as a direct response to the U.S. Federal Reserve’s ongoing strategy of easing monetary policy to support a slowing economy.
Now, what does this really mean? Essentially, Citibank is making borrowing cheaper for both individuals and businesses. Whether it’s a home loan, a credit line, or a commercial loan, many customers are likely to see slightly lower interest costs. The decision aligns closely with the Fed’s latest quarter-point rate cut, which brought the federal funds rate down to a target range of 3.75% to 4.00%. This marks the second time in two months that Citibank has lowered its base rate, following a similar reduction in September—from 7.50% to 7.25%.
The Fed’s decision, supported by a 10-2 vote from the Federal Open Market Committee, aims to balance the two big economic priorities: employment and inflation. Inflation, which once ran uncomfortably high, has cooled to near the Fed’s 2% target, with September’s PCE index showing a 2.1% annual rise. However, the job market has shown some softening—unemployment has edged up to 4.1%, and job growth has slowed to around 104,000 per month over the last quarter. Fed Chair Jerome Powell emphasized that uncertainty remains high, and that rate cuts are meant to sustain momentum without reigniting inflation pressures.
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Citibank’s adjustment reflects that cautious optimism. The prime lending rate, which typically stands about three percentage points above the Fed’s top range, has also been brought down to 7%. This makes Citibank’s move not just timely, but part of a broader wave of easing across major financial institutions.
For borrowers, this translates into tangible savings. Take, for example, a $100,000 loan—at the previous 7.25% rate, annual interest would be around $7,250, but at 7%, it drops to $7,000. While that $250 difference might not seem huge, on larger loans or over several years, it really adds up.
On the other hand, savers might not be as pleased. Deposit rates could inch lower as banks adjust yields to reflect the changing rate environment. Still, the broader expectation is that lower rates will help boost spending, investment, and confidence across key sectors such as housing and manufacturing.
Citigroup’s stock even ticked up slightly in after-hours trading following the announcement—an early sign that investors are viewing this as a supportive move for economic activity.
Overall, Citibank’s rate cut underscores how closely commercial banks are moving in step with central bank policies. In a time of global uncertainty, this is one more attempt to keep the U.S. economy steady, flexible, and moving forward.
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