On December 10, 2025, the Federal Reserve FOMC meeting concluded, announcing the third consecutive interest rate cut of 25 basis points, lowering the target range for the federal funds rate to 3.50%-3.75%. Powell's series of statements during the press conference further stirred global markets—gold and silver first fluctuated and then rose, silver set a new historical record, and the Dow Jones surged over 1%. Trump remarked that 'the rate cut is not enough,' with policy divergence and market euphoria occurring simultaneously!
The following are the key points from this Federal Reserve statement and Powell's press conference, which explain the impact on global assets:
1. Core of the FOMC statement: Interest rate cut realization + policy differentiation, resumption of bond purchases releases liquidity
1. Interest Rate Adjustment: Three consecutive cuts of 25 basis points, 3 dissenting votes.
This is the Federal Reserve's third interest rate cut this year after September and October, with a total cut of 75 basis points, but the decision was not reached unanimously: Board member Milan advocated for a more aggressive cut of 50 basis points, while Kansas City Fed President Smith and Chicago Fed President Goolsbee supported maintaining rates, marking the first time in six years that the FOMC had three dissenting votes, highlighting increasing internal policy divisions.
2. Interest Rate Outlook: One rate cut each in the next two years, the dot plot remains unchanged.
The statement clearly states that 'further adjustments to the extent and timing of interest rates will be considered', but no clear path was provided; the latest median in the dot plot remains the same as in September, expecting a 25 basis point cut each in 2026 and 2027, with a median interest rate of 3.4% at the end of 2026 and 3.1% at the end of 2027. However, there are clear divisions among officials, with 7 expecting no rate cuts in 2026 and 4 supporting two 25 basis point cuts.
3. Inflation and Economy: Inflation remains high but lowers the forecast for next year, GDP is raised across the board.
In terms of inflation, the statement said that 'inflation has risen compared to the beginning of the year and is still at a relatively high level', but in the SEP (Summary of Economic Projections), the forecast for next year's inflation was lowered to 2.4%, while noting that inflation will not return to the 2% target until 2028; in terms of the economy, the statement on 'moderate expansion' was maintained, with GDP growth rates raised across the board for the next three years, and the GDP growth rate forecast for 2026 raised by 0.5 percentage points to 2.3%.
4. Employment Market: Removed the phrase 'low unemployment rate', caution against downside risks.
The statement no longer refers to the unemployment rate as 'low', instead emphasizing that 'downside risks in employment have increased in recent months', but still maintains the forecast for next year's unemployment rate at 4.4%. Powell later added that recent job growth has been overstated by 60,000 positions, and it is expected that job positions will decrease by 20,000 per month.
5. Liquidity Operations: Resumption of bond purchases + relaxation of repo restrictions.
The Federal Reserve announced that it will start purchasing short-term Treasury bills from December 12, buying $40 billion in Treasury bills over the next 30 days, with the scale of purchases expected to remain high for several months before gradually reducing; at the same time, it removed operational restrictions on the standing overnight repo operations to inject liquidity into the market.
2. Powell's press conference: Probability of interest rate hikes approaches zero, tariffs become a key variable for inflation.
1. Interest Rate Position: Upper end of the neutral range, not considering rate hikes.
Powell made it clear that current interest rates are at the 'upper end of the neutral range', and monetary policy has no preset course, and will be adjusted based on data from each meeting; emphasized that 'no one currently expects interest rate hikes as a baseline', with future policy disagreements concentrated on 'whether to maintain rates or cut them', with no decision yet made for the January meeting next year.
2. Interpretation of Inflation: Upside risks, tariffs are the core influencing factor.
Powell admitted that the inflation risk still leans upwards, with the peak likely fluctuating a few tenths of a percentage point around current levels; the key statement is that 'the current inflation overshoot is mainly caused by tariffs', and the impact of tariffs is likely a 'one-time price increase', if tariffs are removed, inflation will fall back to the low end of the 2% range, and if there are no new tariffs, goods inflation may peak in the first quarter of next year.
3. Economy and Employment: Not worried about overheating, the employment market is gradually cooling.
Regarding the economic outlook, Powell stated that he does not believe the economy is overheating, supported by AI spending and consumer expenditure, with a baseline outlook for next year of 'steady growth'; in terms of employment, he confirmed that there are downside risks in the labor market, with the unemployment rate potentially rising further by 0.1%-0.2%, showing a gradual cooling trend overall.
4. Clarification on Bond Purchases: Only for reserve management, not quantitative easing.
Regarding the resumption of bond purchases, Powell clarified that this move is 'only for reserve management', aiming to support liquidity in the overnight funding market, and is not a new round of quantitative easing, with future adjustments to the scale of bond purchases based on market conditions.
3. Market Reaction and Subsequent Expectations: Asset frenzy + expectation of a 55 basis point rate cut next year.
1. Global markets stir up waves.
During the meeting, gold and silver prices rose and then fell before rising again, with silver reaching a historic high; U.S. Treasury yields fell by about 4 basis points, the dollar weakened overall, and non-U.S. currencies strengthened collectively; the three major U.S. stock indexes closed higher collectively, with the Dow Jones soaring by 497.46 points, an increase of 1.05%, the S&P 500 index rising by 0.68%, and the Nasdaq rising by 0.33%.
2. Expectation of rate cuts next year: Futures market bets on 55 basis points.
As of the time of writing, the futures market expects the Federal Reserve to cut rates cumulatively by 55 basis points in 2026, a slight increase compared to before the meeting; the probability of a 25 basis point cut in January next year is only 24.4%, with multiple Wall Street investment banks predicting the rate cut in the next year to be between 50-75 basis points, showing an overall 'cautious rate cut' trend.
3. Trump states: Criticizes the inadequacy of the interest rate cut.
After the meeting, Trump publicly criticized Powell, believing this rate cut could have been 'greater', consistent with the position of some officials who advocated for a 50 basis point cut, and may continue to pressure the Federal Reserve.
Key Summary:
This time the Federal Reserve's interest rate cut has been implemented but sends a 'cautious signal', with internal divisions exacerbated by dual risks of inflation and employment, leaving uncertainty in the policy path for next year. For investors, silver, U.S. stocks, and other risk assets have already benefited first, while a weaker dollar and liquidity easing may continue to favor non-U.S. currencies and the crypto market. Future attention needs to be focused on changes in tariff policies, employment data trends, and whether the January meeting next year will continue the pace of rate cuts.
Content for reference only, not constituting investment advice.
