A divided US Federal Reserve has delivered a third consecutive interest-rate cut and maintained their outlook for just one cut in 2026.
The Federal Open Market Committee (FOMC) voted 9-3 to lower the benchmark federal funds rate to a range of 3.5%-3.75%. It also subtly altered the wording of its statement suggesting greater uncertainty about when it might effect a rate cut again.
The dissents and the rate projections highlight divisions among policymakers that have emerged over whether weakness in the labour market or stubborn inflation represent the larger danger to the US economy.
Summary of US Fed decisions on 10 December 2025:
- US Fed cuts rates by 25 bps in 3rd rate cut of 2025
- The Fed will consider “extend and timing” of additional adjustments
- The Fed will begin purchasing US Treasury Bills on 12 December
- The Fed will buy $40 billion of US Treasury bills in 30 days
- US Federal Reserve signals rate cuts may be done for now
In its October statement, the FOMC described what it would take into account “in considering additional adjustments” to their benchmark. In Wednesday’s statement, the committee reverted to language used last December—just before a pause in rate cuts—to say “in considering the extent and timing of additional adjustments”.
Dissent at the Fed
The result marked the first time since 2019 that three officials voted against a policy decision, with dissents on both ends of the policy spectrum.
Two regional Fed presidents—Austan Goolsbee from Chicago and Jeff Schmid from Kansas City—voted against the rate cut, preferring a status quo. Governor Stephen Miran, whom US President Donald Trump appointed to the central bank in September, dissented again in favour of a larger, half-point reduction.
US Economic Data
A conflicting US economic data explains why there hasn’t been a unanimous vote on the FOMC since June. The US government shutdown complicated the policy outlook by delaying the release of key data.
- The US unemployment rate rose to 4.4% in September, up from 4.1% in June.
- The US inflation rate rose 2.8% in the year through September, still higher than the central bank’s 2% target.
- The US GDP growth rate is seen at 2.3% in 2026, as against 1.8% projected earlier. The inflation rate is seen easing to 2.4% from 2.6% earlier.
The third US Fed rate cut of 2025 comes soon after Trump said he’s decided whom he will nominate to succeed Jerome Powell as Fed chair in May and indicated a decision will be announced early next year. The White House has poured criticism on the Fed for not cutting interest rates more quickly, fueling concerns that the central bank’s independence is under threat.
