The US Federal Reserve‘s Federal Open Market Committee held on 9-10 Dec 2025. The Results has been arrived. A 25 Basis point cut to the federal fund rate, bringing the target range to 3.50% -3.75% – the third such reduction this year amid cooling labor market and sticky inflation
Monetary Policy Shift
The Federal Open Market Committee lowered rates to support maximum employment while aiming for 2% inflation, noting elevated uncertainty and rising downside employment risks. Projections indicate PCE inflation at 2.9% for 2025 (down from September’s 3.0%) and core PCE at 3.0%, with the fed funds rate path at 3.6% end-2025 and declining to 3.0% longer-run. Three dissenters’ highlighted divisions: one favored a 50 bps cut, two preferred no change.
Economic Outlook
Economic activity expands moderately, but job gains slowed and unemployment edged to 4.5% in projections for 2025, with GDP growth at 1.7% this year rising to 2.3% in 2026. Inflation remains above target despite progress, influenced by tariffs and data gaps from a government shutdown. The Fed will resume shorter-term Treasury purchases starting at $40 billion monthly to maintain ample reserves.
Business Impacts
Lower rates ease borrowing costs for firms, potentially boosting investment and hiring amid labor softness, though persistent inflation may limit further cuts in 2026. Businesses face mixed signals: supportive for expansion but cautious on pricing and wages.
Public and Global Effects
US public benefits from cheaper loans for homes, cars, and credit, aiding households amid elevated living costs. Emerging markets like India may see capital inflows from yield differentials, strengthening rupee and lowering import costs, but stronger dollar pressures exports.
*Note: The above data has been collcted via media sources please check reliable media source before taking any action
