Fed Cuts Rates Again — Starts Buying T-Bills to Restore Market Liquidity

What Happened & What to Know

The Fed lowered its benchmark interest rate by 25 basis points to 3.50%–3.75%, marking the third cut of 2025.

The decision was not unanimous — the vote was 9-3, the biggest dissent in years. Some members wanted a deeper cut, others preferred no change.

In tandem with the rate cut, the Fed announced it will begin buying short-term Treasury bills starting December 12, as part of a shift to “reserve management.” The goal is to restore liquidity in money-markets after the central bank ended its quantitative tightening program.

The first round is expected to be around $40 billion, with a plan for high buying levels over the next few months before tapering off.

The mixed signals — continued rate cuts but also more conservative projections for future moves — suggest the Fed is navigating a tricky balance: supporting growth and employment while still fighting inflation.

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