FOMC Cuts Rates to 3.50%-3.75%: December 2025 Fed Decision
Federal Reserve headquarters in Washington D.C. | Source: Unsplash (Edited)
BREAKING: FOMC Announces 25 bps Rate Cut
The Federal Open Market Committee (FOMC) has cut its key benchmark interest rate by 25 basis points to the range of 3.50% to 3.75% on Wednesday, December 10, 2025.
This decision comes amid elevated inflation levels in the US economy and signs of a weakening job market, marking the third consecutive rate cut starting from September 2025.
Official FOMC Statement Released
The statement highlights that the central bank is balancing its dual mandate of stabilizing prices while supporting the labor market. The committee noted it will continue assessing incoming economic data to determine future policy moves.
Key Economic Data Points
Data shows the unemployment rate reached 4.4% in September 2025, while the economy added 119,000 jobs in November despite the federal government shutdown during that period.
Press Conference: Powell's Remarks
During the press conference following the rate decision, the Fed Chair addressed questions about the rate cut trajectory and economic outlook.
Notable: In October, Powell had stated that "a further reduction in the policy rate at the December meeting is not a foregone conclusion, far from it." Today's decision contradicts that earlier suggestion, indicating shifting economic assessments.
Powell attributed recent inflation pressures to rising goods prices, mentioning the impact of tariffs on imported goods as a contributing factor.
Market Reaction & Historical Context
This December rate cut follows October's 25 basis point reduction to 3.75%-4.00%. The central bank had kept rates unchanged since December 2024 before beginning this cutting cycle in September 2025.
Markets had largely priced in today's rate cut despite earlier uncertainty. The conflicting trends in the US economy—between persistent inflation and labor market softening—created a challenging environment for policymakers.
All eyes now turn to future meetings as the Fed navigates between its inflation-fighting mandate and supporting economic growth amid global uncertainties.
What This Means Going Forward
The Federal Reserve's decision signals continued concern about economic headwinds despite elevated inflation. The three consecutive cuts suggest a shift toward a more accommodative policy stance.
Analysts will be closely watching:
- Next inflation readings
- Job market data for December
- Global economic developments
- Future FOMC meeting guidance
The Fed emphasized that future decisions will remain data-dependent, with no predetermined course for additional rate adjustments.