🦅 Powell's Dovish Pivot: Fed Cuts Rates, Signaling Confidence in "Soft Landing" Trajectory
Washington D.C., December 11, 2025 — In its final policy review of the year, the Federal Reserve delivered an anticipated but highly impactful 25-basis-point interest rate cut, reducing the federal funds target range to 1. $3.50\%–3.75\%$. 2.This move, the third straight quarter-point reduction of 2025, signals the central bank’s growing confidence that it is successfully navigating the treacherous path toward a "soft landing."
Chair Jerome Powell underscored that the decision was a delicate balancing act, driven primarily by the need to safeguard the fragile labor market.3 Despite resilient headline inflation hovering near 4$3\%$, policymakers concluded that the rise in the unemployment rate (up to 5$4.4\%$ in September) and weakening job creation posed a greater immediate threat than sticky prices—which the Fed expects to naturally cool as the effects of tariffs fade.
The Tightrope Walk
The post-meeting statement confirmed the Fed is transitioning from an aggressive inflation fighter to a careful steward of economic growth. The cut immediately boosted risk assets, with Treasury yields easing and Wall Street indices moving higher, reflecting renewed optimism for 2026.
However, the updated "dot plot" and Powell's press conference revealed a divided committee.7 While the median projection signaled further moderate easing in 2026, the absence of unanimous consensus suggests the pace of future cuts is not on autopilot. The Fed will remain resolutely data-dependent, particularly watching the trajectory of core services inflation and the delayed jobs figures.8 The message is clear: the central bank has gained control, but the final descent toward its $2\%$ inflation target requires patience and precision.
