- The US Federal Reserve cut interest rates by 25 basis points (bps), lowering the benchmark rate to between 3.50% and 3.75%.
- This marks the third rate reduction by the Fed in 2025 amid concerns over rising downside risks to employment.
- Job openings increased slightly in October, but hiring declined, and inflation data release was delayed until January.
- The Dow Jones and other major indexes rose following the rate cut announcement.
- The Fed’s Summary of Economic Projections forecasts at least one more rate cut in 2026, with some officials opposing the recent cut.
The US Federal Reserve reduced interest rates by 25 basis points on December 10, 2025, bringing the benchmark lending rate to a range of 3.50% to 3.75%. This is the third rate cut this calendar year, aimed at supporting maximum employment and maintaining inflation at about 2%, as stated in the Fed’s official statement. The Fed noted that economic uncertainty remains high and downside risks to employment have increased recently.
Recent government data showed that job openings rose by 12,000 to 7.67 million in October, but hiring fell by 218,000 to 5.15 million. Inflation data, an important factor for monetary policy, will not be available until January due to a delayed release order. This delay raised concerns among Fed officials and economists about the timing and impact of the rate cut.
Following the announcement, the Dow Jones industrial average increased by 230 points. The S&P 500 and Russell indexes also posted gains. Along with the rate decision, the Fed released its final Summary of Economic Projections (SEP) for 2025. This report includes forecasts on economic growth, inflation, and future interest rate moves. The SEP anticipates one more interest rate cut in 2026, consistent with projections from September.
Not all Fed officials agreed with the recent action. Three members, including Stephen Miran, a favored figure of former President Trump, voted against the 25 bps cut, with Miran advocating a larger 50 bps reduction. The Fed has not specified when more rate cuts may occur but indicated at least one would likely happen next year.
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