Fed Cuts Rates Third Time Amid Economic Stimulus Push

The United States Federal Reserve announced its third consecutive interest rate reduction on Wednesday, December 10, 2025, lowering the benchmark federal funds rate by 0.25 percentage points. This decision aims to stimulate the economy and address a weakening labor market, as reported by CBS News.

citizensbank.com reported, The Federal Open Market Committee (FOMC) set the new target range for the federal funds rate between 3.50% and 3.75%, marking a significant shift in monetary policy. This latest cut brings the total reductions for 2025 to 0.75 percentage points, according to Mint.

Despite the consensus for a cut, the decision was not unanimous, with a 9-3 vote reflecting internal divisions within the FOMC. The Guardian noted that some members preferred no change, while others advocated for a more aggressive 0.5 percentage-point reduction.

cbsnews.com noted, Fed Chair Jerome Powell emphasized the central bank's commitment to balancing maximum employment with stable prices, even as inflation remains somewhat elevated. Powell stated that the Fed is "well positioned to wait to see how the economy evolves" before considering further adjustments, CBS News reported.

The move comes amidst challenges, including a lack of comprehensive economic data due to a recent U.S. government shutdown, as highlighted by CBS News. This data gap complicates the Fed's assessment of the economic landscape and future policy direction.

livemint.com reported, Looking ahead, Fed officials project a cautious approach for 2026, signaling only one additional rate cut for the entire year. This outlook suggests a potential pause in the easing cycle, according to CNA, as policymakers assess incoming economic data.

• The Federal Reserve's recent rate cut on December 10, 2025, lowered the federal funds rate to a range of 3.50% to 3.75%, marking the third such reduction this year. This series of cuts, totaling 75 basis points since September, aims to counteract a slowdown in job growth and stimulate economic activity, as detailed by CBS News. The central bank's dual mandate focuses on achieving maximum employment and maintaining price stability.
• The decision to cut rates was met with internal dissent, underscoring the complexities facing the FOMC. Three members voted against the 25-basis-point reduction; Stephen Miran pushed for a larger cut, while Austan Goolsbee and Jeffrey Schmid preferred to keep rates unchanged, according to the Federal Reserve's official statement. This division signals ongoing debate about the optimal path for monetary policy.
• A significant challenge for the Fed has been the absence of up-to-date economic indicators, including job and inflation reports, due to a recent U.S. government shutdown. This lack of data has forced policymakers to rely on available indicators and internal surveys, making precise economic assessments more difficult, as noted by Supply Chain Dive.
• Despite the rate cuts, inflation remains a concern, hovering around 3% and exceeding the Fed's 2% target. Mint reported that the FOMC acknowledged elevated inflation levels, partly attributing them to tariffs imposed by President Donald Trump. These tariffs have contributed to price pressures, complicating the Fed's efforts to manage inflation.
• The Fed's economic projections for 2026 indicate a more optimistic outlook for growth, with GDP expected to accelerate to 2.3% from a September forecast of 1.8%, as reported by Supply Chain Dive. However, the unemployment rate is projected to remain steady at 4.4%, and inflation is anticipated to cool to 2.4% by the end of next year.
• The impact of these rate cuts extends to borrowing costs for both businesses and consumers. Citizens Bank explained that lower rates make it cheaper to borrow money, encouraging investment and spending, which can spur economic growth. Conversely, savers may see a decrease in interest earned on bank deposits.
• The upcoming change in Federal Reserve leadership adds another layer of uncertainty, as Fed Chair Jerome Powell's term concludes in May 2026. Al Jazeera reported that President Trump is preparing to nominate a replacement, and the new leadership's stance on monetary policy could influence future rate decisions. This transition could lead to shifts in the Fed's long-term strategy.