Archive · 11 Dec 2025
US Fed Cuts Rates Third Time
The US Federal Reserve, led by Jerome Powell, decided to lower interest rates for the third time this year.
They cut the rate by a small amount, to between 3.50% and 3.75%.
This decision was made to help the economy, as there are concerns about jobs and inflation.
Most members of the Fed agreed with this decision, but a few wanted different changes.
The Fed also said they might not raise rates in the future and will buy some short-term bonds to keep the economy stable.
Markets reacted positively, with big gains in the stock market and a drop in the value of the US dollar.
However, some people are still worried about the economy and think the Fed might not cut rates as much as hoped next year.
The US Federal Reserve cut the key interest rate by 25 basis points to the range of 3.50% to 3.75% on Wednesday, 10 December 2025.
This marks the third consecutive rate cut in 2025, with a total of 75 basis points cut this year.
Nine out of 12 FOMC members voted in favor of the rate cut, while three members had different opinions.
The Fed acknowledged downside risks to the labor market and elevated inflation levels, aiming to stabilize the economy and achieve its dual mandate.
Markets reacted positively to the rate cut, with the Dow Jones and S&P 500 gaining significantly, while the Nasdaq saw modest gains.
- Who
- The Federal Open Market Committee (FOMC) led by Jerome Powell
- What
- Cut the key interest rate by 25 basis points to the range of 3.50% to 3.75%
- When
- Wednesday, 10 December 2025
- Where
- United States
- Why
- To address elevated inflation levels and downside risks to the labor market, while aiming to stabilize the economy and achieve the Fed's dual mandate of maximizing employment and achieving 2% inflation.
Market Optimists
Cautious Analysts
Future Rate Cuts
Market Optimists
Markets are optimistic about the possibility of more rate cuts in 2026, despite the Fed's projection of only one cut.
Cautious Analysts
Cautious analysts believe the Fed's projection of only one rate cut in 2026 is more realistic and that markets may be overreacting.
Fed's Policy Impact
Market Optimists
Market participants are pleased with the Fed's decision to rule out rate hikes and the announcement of purchasing short-term securities, which they see as supportive of economic growth.
Cautious Analysts
Some analysts caution that the Fed's policy may not be enough to address downside risks to the labor market and elevated inflation levels.
- Interest Rate Range
- 3.50% to 3.75%
- Total Rate Cuts in 2025
- 75 basis points
- Votes for Rate Cut
- 9 out of 12 members
- Unemployment Rate
- 4.4% in September 2025
- Fed's Dual Mandate
- Maximizing employment and achieving 2% inflation
- Fed's Reserve Balances
- Declined to ample levels
- Fed's Securities Purchase
- $40 billion starting Friday
- Market Reaction
- Dow Jones up 500 points, S&P 500 near record high, Nasdaq up 0.3%
- US Dollar Index
- Fell below 99
- Gold Prices
- Advanced due to lower interest rates
Sources
Nifty extends losing streak to third day ahead of Fed policy decision
US Stock Market Today: Wall Street flat ahead of Fed decision, GE Vernova climbs 15%
US Stock Market today: Dow jumps over 1.3%, S&P 500, Nasdaq rally after US Fed cuts interest rates — Details here
Explained — Here's why US markets rallied despite fewer than expected cuts projected for 2026
