The Federal Reserve closed out 2025 with a 25-basis point cut, the third consecutive cut to end the year.
At its December meeting, the Federal Reserve Open Market Committee (FOMC) elected to lower the federal funds rate to a target range of 3.5% to 3.75%. The decision is the third consecutive 25-basis point cut.
In its announcement, the FOMC noted economic activity has been expanding “at a moderate pace,” though job gains have slowed and unemployment has “edged up through September.” At the same time, inflation has moved up since earlier in the year and remains above the FOMC’s long-run target of 2%.
“Uncertainty about the economic outlook remains elevated,” the FOMC noted in its announcement. “The committee is attentive to the risks to both sides of its dual mandate and judges that downside risks to employment rose in recent months.”
The December decision was clouded somewhat by the lack of government inflation and jobs data. The Bureau of Labor Statistics cancelled its October inflation and jobs reports because the government shutdown prevented data from being collected. It also delayed the November jobs report to Dec. 16 from Dec. 5 and the inflation report to Dec. 18 from Dec. 10, both after the Fed meeting.
The latest decision by the Federal Reserve, however, was not a unanimous decision. Nine voting members opted for a 25-basis point cut, two voted to hold rates steady, and recent President Trump-appointee Stephen Mirian elected to cut rates by 50 basis points.
