On December 10, 2025, the Federal Reserve once again eased monetary policy at its meeting, lowering the target range for the federal funds rate by 25 basis points to 3.50–3.75%. In its official statement, the Federal Reserve indicated that the U.S. economy continues to expand at a 'moderate pace'; however, the pace of job growth has noticeably slowed, unemployment has slightly increased, and inflation has once again been 'somewhat high' (above the target level of 2%). The regulator noted that the shift of risks towards a worsening situation in the labor market compels it to maintain a more accommodative policy. At the same time, the Federal Reserve reaffirmed its commitment to its long-term goals – maximum employment and 2% inflation – and promised to closely monitor incoming data before any additional rate adjustments.
During the press conference, Fed Chairman Jerome Powell emphasized: after lowering rates by 75 basis points over the past few months, 'the federal funds rate is in a broad range of neutral level estimates', and now the Fed 'is ready to observe the development of the economy' at each subsequent meeting. In other words, the regulator continues to take a cautious position: it has not committed to a rigid course but promises to make decisions 'at each meeting anew', depending on new figures on inflation and employment. The committee 'will be ready to adjust policy if necessary' and will consider a wide range of data – from the labor market situation to inflation expectations and international economic signals.
It should be noted that the decision to lower the rate was not without disagreements. The voting was divided: three committee members abstained from supporting this step – for instance, the head of the Chicago Fed, A. Goolsbee, and the chairman of the Kansas Fed, D. Schmidt, insisted on a pause (maintaining the rate), while Fed board member S. Miran called for a more aggressive rate cut of 50 basis points at once. This divergence of opinions demonstrates that part of the Fed remains concerned about inflation (preferring a pause), while another part is skeptical about the pace of economic and labor market growth.
Economically, the situation in the U.S. is as follows: according to fresh official data, in November 2025, unemployment was around 4.4% (compared to 4.3% the previous month), while core inflation (PCE) held steady at around 2.8% annually. In other words, prices are rising slightly faster than the central bank would like (2%), and the labor market shows signs of cooling – firms are hiring more slowly, and unemployment is rising. These factors prompted the Fed to take a cautious easing approach. At the same time, mixed macroeconomic signals have recently emerged: the economy is growing, but at 'moderate rates', and the growth of corporate investments (for example, Amazon and Microsoft's activation in Asia) only partially compensates for the overall dynamics.
The market reacted positively to the regulator's decision. After the Fed's meeting, U.S. stock indices sharply increased: the Dow Jones index rose by more than 500 points, the S&P 500 by 0.7%, and Nasdaq by 0.4%. This indicates that market participants are pleased with the softer monetary policy. Investors are already pricing in additional rate cuts in the future – currently, the market trades with about a 68% probability that the Fed will implement two or more rate cuts in 2026. Industrial and financial companies were in the highest demand: for example, Amazon stocks increased by ~1.6%, JP Morgan by over 3%, while Microsoft slightly decreased (-2.7%) after announcing significant investments in infrastructure development in India. At the same time, the yield on U.S. 10-year bonds fell, and the dollar weakened against the main basket of world currencies, which is characteristic of the sentiment of a ‘risky’ asset (stocks) against the backdrop of expected policy easing.
Here we also have the fiscal background: in November 2025, the U.S. federal budget deficit significantly reduced – to $173 billion from $367 billion a year earlier. This was aided by record revenues to the budget (due to high tax receipts and import tariffs) and reductions in spending (including due to a record shutdown). The improvement in the public finance situation not only alleviates pressure on the economy but also indicates that consumer demand and business activity are supported by stable tax 'injections' into the treasury.
What can be said in the end. The Fed at the finish line of 2025 demonstrates a cautious, balanced approach. On one hand, the Fed continues to lower rates to support economic growth and the labor market, which is perceived positively by the market. On the other hand, the regulator is clearly not in a hurry – the diversified voice of the committees and the emphasis on careful data analysis indicate that there is still little ‘gas’, and a pause is to be expected. The main question for investors now is how many more easing measures are factored into the forecasts and when the Fed will switch back to the ‘brake’. So far, the Fed is proceeding at a moderate pace: having missed previous ‘tangents’, it is ready to continue to closely monitor the ‘road’ of the economy, not missing the slightest signs of new risks. Overall, this creates a favorable environment for the economy in the short term (low rates stimulate consumption and investment), but at the later stage of the year, it forces a look at inflation and potential consequences of prolonged ‘ease of the money market’