Breaking News: US Federal Reserve cuts rates by 25 bps, bringing target range to 3.50 - 3.75%

• US Fed Federal Funds Rate (December 2025): 3.50-3.75% vs 3.50-3.75% expected, meets consensus

In support of its goals and in light of the shift in the balance of risks, the Committee decided to lower the target range for the federal funds rate by 1/4 percentage point to 3-1/2 to 3-3/4 percent. In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective.

Federal Reserve FOMC Statement, December 10th 2025

Breaking: The Federal Reserve has voted to cut rates by 25 basis points in its December 2025 decision, bringing the policy rate target range to 3.50% - 4.75%, meeting market expectations.

Key takeaway: Representing the third consecutive cut made by the Federal Reserve, a decision to cut in today’s vote shows a shifting of priorities away from controlling inflation, and instead focuses on improving an otherwise softening US labour market. US interest rates are now at their lowest level since 2022. Three policy makers dissented to the decision, with two voting to maintain rates, and one other voting for a 50 basis point cut.

In the minutes that followed the release:

• The US dollar (DXY) fell in value by -0.31%
• Gold bullion (XAU/USD) rallied by +0.62%
• The S&P 500 (SPX500USD) rallied by +0.15%
  

While today’s decision meets broader market expectations of a 25 basis point cut, it’s important to remember how contested this vote was supposed to be - at least on paper.

Having cut rates in October, markets originally predicted another would follow in December, until Fed Chair Jerome Powell and Vice Chair Jefferson made some hawkish comments a week or so later, which saw rate cut probabilities drop to around 60%.

Since, however, it would seem that there is no shortage of dovish commentary from Fed policymakers, vindicated by a rising unemployment rate and a slowdown in job additions to the US economy, which left the rate cut probability at over 80% going into today’s decision.

Looking ahead to January’s decision, markets now expect rates to be maintained, but as we’ve seen since October, nothing is set in stone.

Read Elior’s coverage on the latest FOMC meeting: The Fed cuts rates by 25 bps to 3.75% – Market Reactions