Shift

Jerome Powell

Chair

Overnight

Reserve

<p>The Federal Reserve delivered a quarter-point rate cut on December 10, 2025, citing slowing job growth, a softer labor market, and renewed upward pressure on inflation. Policymakers characterized economic activity as expanding “at a moderate pace,” while acknowledging that uncertainty around the outlook has increased and downside risks to employment have risen in recent months.</p>
<h3 id="fed-responds-to-changing-risk-dynamics">Fed Responds to Changing Risk Dynamics</h3>
<p>The decision lowers the federal funds rate to 3.50%–3.75%, marking a shift toward easing after a year defined by stagnating labor conditions and uneven inflation progress. While inflation has picked up since earlier in the year, the Committee emphasized that achieving maximum employment remains a central priority as job gains continue to weaken and unemployment edges higher.</p>
<p>The <strong><a href="https://www.federalreserve.gov/monetarypolicy/files/monetary20251210a1.pdf" rel="noopener noreferrer nofollow">statement</a></strong> highlighted that the Fed will weigh future adjustments based on incoming data, the evolving outlook, and the balance of risks. Officials underscored their commitment to returning inflation to 2% over time while supporting labor market stability.</p>
<h3 id="operational-moves-accompany-the-rate-cut">Operational Moves Accompany the Rate Cut</h3>
<p>Alongside the policy rate adjustment, the Board of Governors approved several operational steps to reinforce the Committee’s stance:</p>
<ul>
 <li>The interest rate on reserve balances was reduced to 3.65%, effective December 11.</li>
 <li>Overnight repo operations will run at 3.75%, while reverse repo operations will be offered at 3.50%, with a per-counterparty limit of $160 billion.</li>
 <li>The Fed will begin purchasing shorter-term Treasury bills, and if necessary, additional securities with maturities of up to three years to ensure reserves remain ample.</li>
 <li>All principal payments from Treasury and agency holdings will continue to be reinvested into Treasury bills.</li>
</ul>
<p>These measures collectively support liquidity conditions while anchoring the new rate target.</p>
<div class="read-more tdi_7">
 <div class="td_module_flex td_module_flex_1 td_module_wrap td-animation-stack td-cpt-post td-module-exclusive">
  <div class="td-module-container">
   <div class="td-image-container">
    <div class="td-module-thumb">
     <a href="https://www.ethnews.com/strategy-responds-to-msci-and-urges-it-to-keep-bitcoin-companies-in-global-indexes/" rel="noopener noreferrer nofollow"> <span style="background-image: url(https://www.ethnews.com/wp-content/uploads/2025/11/Strategy-anciennement-MicroStrategy-continue-dacheter-du-Bitcoin-BTC.webp); background-size:cover;"></span> </a>
    </div>
   </div>
   <div class="td-module-meta-info">
    <h3 class="entry-title td-module-title" id="a-href-https-www-ethnews-com-strategy-responds-to-msci-and-urges-it-to-keep-bitcoin-companies-in-global-indexes-rel-noopener-noreferrer-nofollow-strategy-responds-to-msci-and-urges-it-to-keep-bitcoin-companies-in-global-indexes-a"><a href="https://www.ethnews.com/strategy-responds-to-msci-and-urges-it-to-keep-bitcoin-companies-in-global-indexes/" rel="noopener noreferrer nofollow">Strategy Responds to MSCI and Urges it to keep Bitcoin Companies in Global Indexes</a></h3>
   </div>
  </div>
 </div>
</div>
<h3 id="rising-dissent-highlights-divided-views">Rising Dissent Highlights Divided Views</h3>
<p>This meeting revealed wider internal disagreement than earlier in the year. Three members voted against the Committee’s decision:</p>
<ul>
 <li>Stephen Miran favored a larger 50-basis-point cut.</li>
 <li>Austan Goolsbee and Jeffrey Schmid preferred no change to rates.</li>
</ul>
<p>Despite dissent, the majority, including Chair Jerome Powell and Vice Chair John Williams, supported the 25-basis-point reduction as a balanced response to current risks.</p>
<h3 id="looking-ahead">Looking Ahead</h3>
<p>While policymakers describe inflation as still elevated, the statement places heavier emphasis on labor-market softening and broader uncertainty. With the Fed signaling readiness to adjust policy again if conditions deteriorate, attention now shifts to incoming employment data, inflation expectations, and signs of financial or international strain.</p>
<p>The December decision positions the central bank at a new crossroads: easing policy to cushion slowing momentum, while remaining vigilant to prevent inflation from re-accelerating.</p>
<p>The post <a href="https://www.ethnews.com/fed-cuts-rates-by-25-bps-as-growth-slows-and-risks-shift/" rel="noopener noreferrer nofollow">Fed Cuts Rates by 25 bps as Growth Slows and Risks Shift</a> appeared first on <a href="https://www.ethnews.com" rel="noopener noreferrer nofollow">ETHNews</a>.</p>

Fed Cuts Rates by 25 bps as Growth Slows and Risks Shift

Table of Contents

ETHNews

Other articles published on Dec 10, 2025

Join our free newsletter for daily crypto updates!