Federal Reserve cuts rates but shows caution about further easing

10th Dec 2025 13:43

(Sharecast News) - The Federal Reserve voted to lower interest rates on Wednesday for its third straight meeting, but signalled caution over near-term decisions amid a stalling inflation rate and signs of weakness in the labour market.

In its final meeting of 2025, the Federal Open Market Committee voted 9-3 in favour of a rate cut, with the Federal Funds Rate being trimmed by 25 basis points to a range of 3.5% to 3.75%.

The decision was in line with moves made in September and October, and the sixth rate cut since September 2024, bringing borrowing costs to their lowest since 2022.

However, the scope of the dissent among policymakers was stark, with Austan Goolsbee and Jeff Schmid voting for no change to rates, while Trump-appointed Stephen Miran called for a 50bp reduction. This was the first time since 2019 that three FOMC members dissented.

In a statement, the FOMC said available data has shown that economic growth had continued at a "moderate pace", though job gains have slowed and the jobless rate has edged up. Meanwhile, inflation has moved up slightly since earlier in the year and still remains "elevated".

"The Committee seeks to achieve maximum employment and inflation at the rate of 2% over the longer run. Uncertainty about the economic outlook remains elevated. 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 FOMC said.

In a news conference after the announcement, Fed chair Jerome Powell said the central bank is "well positioned to wait and see how the economy evolves from here".

Commenting on the dissenting votes, Powell said: "We made a decision today. We had, you know, nine out of 12 supported it. So fairly broad support. But it's not like the normal situation where everyone agrees on the direction and what to do."