At the meeting on December 10, 2025, the Federal Open Market Committee (FOMC) decided to reduce the benchmark interest rate by 25 basis points to 3.50%–3.75%, the lowest level in about 3 years, marking the third consecutive reduction this year. The decision came in the context of weak U.S. economic data and a slowing labor market.
🔎 Key Details:
The goal of the cut: to support economic activity amid a slowdown in employment growth.
The vote was not unanimous — three members opposed the cut.
📊 Market impact: The decision raised stocks (such as the housing sector) and lowered bond yields.
2) Press conference of Paul Powell and future guidance
Jerome Powell, the chair of the Federal Reserve, held a press conference after the decision and reiterated that the path ahead for monetary policy is not without risks and that the bank will continue to monitor new data before taking any further steps.
📍 Future indicators:
Despite recent cuts, there may not be additional cuts in the near term if inflation remains above target.
Markets have already begun to expect a stronger focus on inflation and employment data in 2026.
3. Divisions within the FOMC — raising the level of interest
The decision was not unanimous:
Two members (Goolsbee & Schmid) opposed the cut, arguing that inflation remains high and warrants caution.
⚠️ This division highlights an important point in #FOMCWatch:
Monetary policy is not fully unified within the committee — making predictions about the next step more difficult and increasing market volatility.
4) Structural stability in the leadership of the Federal Reserve
Outside the interest rate decision, the Fed announced the reappointment of 11 out of 12 regional bank presidents for 5 years — a move that enhances institutional stability and reduces the likelihood of political interventions.
This indicates:
A desire to maintain the independence of monetary policy;
Continued involvement of economic leaders with experience in decision-making within the FOMC.
5) Market operations and liquidity management
The New York Fed disclosed purchases to maintain liquidity of about $54 billion next month in the treasury market — indicating additional support for financial markets.
6) Professional summary for #FOMCWatch now
Monetary policy direction
🔹 Interest rate cuts are ongoing but at a cautious pace.
🔹 Inflation remains above target, which may limit additional cuts.
The key message from the FOMC:
📌 Increased likelihood of waiting and focusing on inflation and employment data before taking further steps.
📌 Continued delicate balance between supporting growth and controlling inflation.
Potential challenges:
🔸 Divisions within the committee regarding policy.
🔸 Closer monitoring of markets and inflation in the coming months.
🔸 Political impact (such as legal issues regarding the independence of the Fed).
