US Fed FOMC Meeting Highlights: US Federal Reserve slashed interest rates by 25bps as per the decision taken on the two-day FOMC meeting. The committee decided to lower the range by 0.25 percentage point to 3.5%–3.75%.
The central bank had held rates steady for nearly a year, from December 2024 until the first cut in September, before moving toward easing as signs of strain emerged across the economy.
“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 per cent,” said the FOMC in its official statement on Wednesday.
A delicate balancing act
The December decision explains a Fed increasingly mindful of conflicting economic signals. Inflation remains elevated, yet the job market, long the backbone of the US recovery, has begun to show unmistakable signs of fatigue.
Policymakers are now trying to strike the right balance between the Fed’s dual mandate: stabilising prices while safeguarding the labour market. The committee has showed that, despite the October rate cut and Wednesday’s follow-up, it is not on autopilot. Instead, it will continue to evaluate incoming economic data to chart the future path of interest rates.
Recent data from the US Bureau of Labor Statistics explains the Fed’s concern. The unemployment rate rose to 4.4% in September 2025, even as the economy added 119,000 jobs, a gain tempered by the federal government shutdown that weighed on hiring during the period.
The weakening trend has added pressure on policymakers to ensure the ongoing softening does not spill into deeper economic distress.
As the Fed heads into 2026, markets and households alike will be watching closely to see whether this easing cycle continues or whether the central bank reins in expectations once more.
In October, the Fed trimmed rates by 25 basis points, bringing the federal funds target range to 3.75%–4.00%. Global investors are now watching closely, with any move in US rates expected to quickly affect across markets and major economies.
25bps or 50bps rate cut?
The Federal Open Market Committee is widely expected to deliver a third consecutive rate cut at its final meeting of the year. According to the CME FedWatch Tool, 30-day fed-funds futures are pricing in an 87% probability of a 25-basis-point reduction.
Kevin Hassett to be next Fed chair ?
Fed Chair Jerome Powell will address the media after the meeting, offering updates on the economy, labour market, and inflation, and how the central bank is thinking about policy ahead of its next meeting in late January. Powell is set to retire as Fed chair in May 2026, though his term on the Fed’s Board of Governors runs until 2028. Kevin Hassett has emerged as the leading contender to succeed him when his term ends.
US Fed FOMC Meeting, Rate Cut Live Updates: The big growth forecast
The US Fed highlighted that growth has turned-out more resilient than expected, resulting in the Fed significantly revising-up 2026 GDP growth to 2.3% from 1.8% previously.
According to IDFC First Bank, "the upward revision reflects continued growth in consumption and investment. The ongoing AI revolution in the US has spurred investment and enhanced labour productivity."
However, IDFC First Bank believes that "the employment elasticity of growth is likely to reduce. This is also reflected in the growing divergence between strong GDP growth and slowdown in employment generation."
US Fed FOMC Meeting, Rate Cut Live Updates: Bank of Baroda analysis highlights implications for yields, flows and the rupee
Policy Rate Gap Holds Near 150 bps
According to Bank of Baroda Research, the policy rate differential between India and the United States has widened since September as the Federal Reserve resumed its easing cycle. The gap is now about 150 basis points, well below its long-term average.
RBI has largely kept pace with the Fed given softer domestic inflation. Bank of Baroda expects another 25-basis-point Fed cut in 2026 and sees the RBI’s terminal rate settling near 5% around the same time. This suggests the move back toward historical averages could be delayed, keeping the policy gap broadly steady.
Yield Spread Rises to 240 bps
Bank of Baroda notes that the 10-year India–US yield differential has gained momentum since August 2025, tracking the policy gap. The spread now stands near 240 basis points.
Movements in US Treasury yields will depend heavily on incoming macro data, which remains delayed because of the government shutdown.
Yield Gap Supports Debt Inflows
Bank of Baroda Research points out that, under interest rate parity, a wider India–US yield spread should attract more foreign debt flows. Since August 2025, the widening spread has coincided with stronger FPI inflows into Indian debt, though the bank stresses that domestic growth and inflation conditions will remain key.
US Fed FOMC Meeting, Rate Cut Live Updates: Fed signalling a pause for January says IDFC First Bank
The Fed cut policy rate by 25 bps to 3.50- 3.75%. The voting pattern showed growing divergence among FOMC members, with three members out of twelve voting against the rate action. According to IDFC First Bank, this Fed action was on expected lines, "The need for a cut was premised on rising downside risk to employment creation,
with Fed Chair characterising the labour market as “less dynamic and somewhat softer”.
According to them, "The neutral tone of the Fed Chair is also reflected in market pricing of Fed rate cuts with 50 bps cut priced-in 2026 in June and September. In the fixed income market, there was some easing of upward pressure on treasury yields."
According to IDFC First Bank, "the upward pressure on long-end yields reflects expansionary fiscal policy under the Trump administration. We continue to expect three cuts in 2026, driven by expectation of further labour market weakness."
US Fed FOMC Meeting, Rate Cut Live Updates: India–US policy rate gap narrows further
“The policy rate differential between India and the US has picked up since September as the Fed resumed its easing cycle. However, it has remained broadly contained because the RBI, given muted domestic inflation, has kept pace. The differential currently stands at 150 bps, which is much lower than historical averages. Based on the Fed’s long-term projections, another 25 bps cut is expected in CY26, and we expect the RBI’s terminal rate to settle at around 5% at the same time. Thus, mean reversion may be delayed in the near term, and the policy differential is likely to remain at current levels,” said Dipanwita Mazumdar, economist at Bank of Baroda.
US Fed FOMC Meeting, Rate Cut Live Updates: Key Takeaways
Bank of Baroda Research draws four main conclusions:
• The India–US policy rate gap is rising, though faster RBI cuts earlier in the cycle kept the gap contained. A new, slightly lower equilibrium may be forming.
• The 10-year yield differential mirrors the policy gap and is holding around 240 bps. India’s benchmark yield is expected to stay near 6.50–6.60% in the short term.
• A wider yield spread should continue to support FPI debt inflows, offering some near-term support to the rupee.
• Inflation dynamics currently favor India, with food prices largely contained.
US Fed FOMC Meeting, Rate Cut Live Updates: Indian markets on an upward trend
The Indian stock markets are on an upward trend in afternoon trade. Though there is no big impact of the Fed rate cut, it is seen as a sentiment positive. The Nifty and the Sensex are up about half a percent each. The small and midcaps too are seeing brisk buying.
US Fed FOMC Meeting, Rate Cut Live Updates: Split FOMC vote hints at tougher road for future cuts
The US Federal Reserve’s 25-basis-point rate cut drew attention not just for the move itself but for the 9-3 voting split, which suggests policymakers are divided on the path ahead. Markets also took note of the updated dot plot, which indicated only two more cuts - one each in 2026 and 2027, indicating a slower easing cycle.
Explaining the outlook, Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments, said the Fed's move is broadly supportive for risk assets, it is unlikely to significantly shift sentiment in Indian markets right now.
He pointed, “The Fed decision, though favourable from the market perspective, is unlikely to have a significant impact on the Indian market, which is being weighed down by sustained FII selling, heavy IPO supply and weak earnings over the last six quarters. Weakness in the market now presents buying opportunities in high quality stocks, particularly in largecaps and selectively in midcaps.”
US Fed FOMC Meeting, Rate Cut Live Updates: Change likely in Fed stance
The Indian markets have rebounded in afternoon trade. However, speaking on the broader impact, Dr VK Vijayakumar, Chief Investment Strategist, Geojit Investments said, "The noteworthy part of the Fed decision to cut rates by 25 bp is the 9-3 vote, which signals tough road ahead for further rate cuts."
According to him, "the FOMC’s dot plot indicates two more rate cuts - one in 2026 and another in 2027. However, this might change since the the Fed chair has clearly indicated that we are well positioned to wait and see how the economy evolves.”
US Fed FOMC Meeting, Rate Cut Live Updates: The big drivers for Indian markets beyond Fed
The Fed rate cut may have limited impact on sentiment across Indian markets. Market veteran, Ajay Bagga listed out the big drivers for the markets at the moment, " Overall with positive outcomes from the RBI and the US Fed, Indian markets are well positioned for a year end upswing. Expectations are low from the present visit of a US Trade negotiation delegation. However, earnings should rebound in the December quarter on the back of a strong consumption impulse post the GST cuts of end September."
According to Bagga, these factors coupled with expectations from the Union Budget 2026 , "that is a strong setup. What is holding back the markets is continued FPI selling and massive primary market and OFS offerings which are diverting liquidity from secondary markets."
The 25 bps Fed rate cut failed to lift sentiment significantly in India. According to Rajesh Palviya, SVP - Research, Axis Securities, "The Fed has delivered a quarter-point rate cut, marking its third reduction this year. For global equities, the shift is broadly supportive, with lower yields typically lifting risk appetite and favouring both growth and cyclical assets."
For India perspective he said, "a more accommodative Fed and a maturing global rate cycle ease worries around dollar strength and capital outflows, creating a constructive backdrop for the rupee and domestic liquidity. In this environment, buying interest in financials, consumption, and select rate-sensitive sectors is likely to remain resilient, although phases of volatility may persist given the divided Fed and continued uncertainty over the 2026 policy trajectory."
US Fed FOMC Meeting, Rate Cut Live Updates: What Powell said about economy
With Powell’s term ending in May, Trump plans to announce a replacement in January. Powell said he hopes to leave the job with the economy in good shape, aiming for low inflation around 2% and a strong labor market, and that all his efforts are focused on achieving that.
US Fed FOMC Meeting, Rate Cut Live Updates: A hawkish rate cut overall
The S&P 500 rose to nearly a record high, and the Dow gained almost 500 points, building on earlier gains as Powell spoke at his press conference. Several factors from the meeting encouraged investors.
The Fed’s plan to buy short-term bonds should help keep interest rates from rising too much and make stocks more attractive. Powell also suggested that another rate hike is not expected soon, which reassured markets that inflation may not push rates higher immediately. Additionally, the Fed’s focus on supporting the labor market signaled that, despite some disagreements among officials, the priority remains strengthening the economy rather than aggressively fighting inflation.
US Fed FOMC Meeting, Rate Cut Live Updates: What about inflation?
The inflation rate is still a little higher than the Fed’s 2% target, although recent data is limited because of the government shutdown. Lower interest rates could cause prices to rise further. Powell noted that consumer spending has been strong, and he said that tariffs, rather than a weak economy, are currently the main factor pushing inflation up.
US Fed FOMC Meeting, Rate Cut Live Updates: FOMC on the job market?
Fed officials expect the economy to grow more in 2026, and they foresee unemployment staying relatively stable. However, they are somewhat worried about weaker demand for workers and fewer people participating in the labor force. Lower interest rates could help encourage more hiring, according to Powell.
Regarding AI, Powell noted that chatbots are not yet replacing large numbers of jobs, even though some white-collar roles are shrinking in the corporate world. While certain Big Tech companies and major retailers have made high-profile layoffs in 2025, overall job cuts across the economy remain relatively low.
US Fed FOMC Meeting, Rate Cut Live Updates: All about rate cut
The Federal Reserve said on Wednesday that it was lowering its overnight lending rate by a quarter of a percentage point, or 25 basis points, setting the new target range at 3.5% to 3.75%. This was the third rate cut of the year, but the decision was difficult. Some officials wanted to lower rates further to prevent more job-market weakness, while others felt the Fed had already eased enough and worried that more cuts could worsen inflation. The Federal Open Market Committee, which has become increasingly split, approved the move with a 9–3 vote.
Two regional Federal Reserve chiefs, namely Austan Goolsbee from Chicago and Jeff Schmid from Kansas City, voted against the move and wanted interest rates to stay the same. Governor Stephen Miran, appointed by Trump in September, also disagreed, saying he wanted a bigger cut of half a percentage point.
In their October statement, the FOMC explained the factors they would look at when deciding whether to make more changes to their key interest rate. In Wednesday’s statement, the committee returned to wording similar to what they used last December, right before they paused rate cuts, saying they would judge both how much more to adjust rates and when to do it.
US Fed FOMC Meeting, Rate Cut Live Updates: Will there be another rate cut?
When asked whether the Fed would definitely cut rates next time, Powell held back from saying yes. But he did say that no officials currently expect another rate increase.
US Fed FOMC Meeting, Rate Cut Live Updates: Powell says Fed has likely reached the right balance
After the meeting, Chair Jerome Powell told reporters that the Fed has likely taken enough steps to protect jobs, while keeping interest rates high enough to continue reducing inflation.
US Fed FOMC Meeting, Rate Cut Live Updates: Meeting highlights split between policymakers
The disagreements and rate forecasts on Wednesday show that policymakers are split, a Bloomberg report said. Some think a weakening job market is the biggest threat to the US economy, while others believe the bigger problem is inflation that won’t go away.
US Fed FOMC Meeting, Rate Cut Live Updates: Powell signals no rate hikes ahead as Fed nears neutral stance
US Federal Reserve Chairman Jerome Powell said on 10 December 2025 that the central bank is not considering interest rate hikes in the near term, given its closer-to-neutral policy stance. Instead, the Fed is weighing whether to hold rates steady or cut them further, depending on how economic conditions evolve in line with its dual mandate.
“I don't think that a rate hike is anybody's base as the next thing is anybody's base case at this point, I'm not hearing that. What you see is some people feel we should stop here and that we're at the right place and just wait. Some people feel like we should cut once more this year and next year. But when people are writing down their estimates of policy on where it should go, it is either holding here, or cutting a little or cutting more than a little,” said Powell in his speech.
US Fed FOMC Meeting, Rate Cut Live Updates: Powell says Fed rate cuts aimed at stabilising cooling US Labour market
The US Federal Reserve Chairman Jerome Powell said on 10 December 2025 that the Fed’s latest interest rate cut is intended to support a labour market losing momentum as unemployment rises.
“With today's decision, we have lowered our policy rate three-quarters of a percentage point over our last three meetings. This further normalisation of our policy stance should help stabilise the labor market while allowing inflation to resume its downward trend toward 2% once the effects of tariffs have passed through,” said Powell in his speech.
The US Federal Reserve noted in its 2025 policy update that declining reserve balances will prompt the central bank to begin purchasing short-term Treasury securities to ensure an adequate supply of reserves.
“The Committee judges that reserve balances have declined to ample levels and will initiate purchases of shorter-term Treasury securities as needed to maintain an ample supply of reserves on an ongoing basis,” said the US Fed.
US Fed FOMC Meeting, Rate Cut Live Updates: US jobless rate seen rising to 4.5% by year-end as labour market softens, says Powell
The unemployment rate in the US is expected to reach 4.5% by the end of 2025, with downside risks to employment increasing in recent months.
“In this less dynamic and somewhat softer labor market, the downside risks to employment appear to have risen in recent months. The median projection of the unemployment rate is 4.5% at the end of this year and edges down thereafter,” said Jerome Powell in his address on Wednesday.
Powell also noted that official employment data for October and November is delayed, but early indicators show that layoffs and hiring activity have remained relatively low so far.
US Fed FOMC Meeting, Rate Cut Live Updates: Fed’s 2026 outlook splinters as dot plot reveals deep divide on future rate path
At its December 10 meeting, the US Federal Reserve’s Federal Open Market Committee (FOMC) lowered the benchmark lending rate by 25 basis points.
But the latest dot plot suggests that 2026 could be a far more contentious year for policy direction, even as the Fed broadly signals a continuation of its easing cycle.
The projections show striking divergence among FOMC members. Four officials expect rates to hold steady in the 3.5%–3.75% range through 2026. Another four anticipate a modest 25 bps cut, while an equal number see a deeper 50 bps reduction, taking the policy rate into the 3%–3.25% band.
At the more dovish end, three members project that rates should fall below 3% in 2026. Conversely, three members believe a 25 bps rate hike will be warranted.
US Fed FOMC Meeting, Rate Cut Live Updates: What the Fed’s new forecasts say about the economy
Fed’s new forecasts show they now expect the economy to grow a bit faster and inflation to cool more than they thought a few months ago. Even so, they don’t expect to cut interest rates much anytime soon, only one more cut is projected for 2026, and some members don’t think any additional cuts are needed at all. That disagreement makes the future path for rates unclear. Overall, the Fed expects the economy to grow steadily over the next two years, inflation to ease to 2.4% next year, and unemployment to stay at 4.4%.
US Fed FOMC Meeting, Rate Cut Live Updates: How Fed rate cuts affect borrowing and lending
Federal Reserve’s interest rate influences what companies charge for loans in the US, including mortgages, credit cards, and auto loans. However, not all debt gets cheaper when the Fed cuts rates. Fixed-rate loans remain unchanged after a cut. In contrast, adjustable-rate mortgages may see payments decrease as their rates reset. Loans tied to benchmarks like US Treasuries may take longer to reflect a Fed cut. People seeking new loans may find lower rates, though it often takes a larger-than-expected cut for those changes to become noticeable. Rate cuts don’t just impact borrowers. Savers with interest-earning accounts may see their returns decline when rates fall.
US Fed FOMC Meeting, Rate Cut Live Updates: Fed to begin buying short-term treasuries to support market liquidity
The Federal Reserve on Wednesday announced it will begin purchasing short-dated government bonds to help manage market liquidity and maintain firm control over its interest rate target system.
The technically focused purchases will start on December 12, with the first round totaling about $40 billion in Treasury bills.
The Fed said these initial purchases will remain “elevated for a few months” before being “significantly reduced.”
US Fed FOMC Meeting, Rate Cut Live Updates: Three Fed officials dissent on rate cut
Kansas City Fed President Jeffrey Schmid and Chicago Fed President Austan Goolsbee both supported holding rates steady instead of cutting. Fed Governor Stephen Miran supported lowering the federal funds rate by half a percentage point, rather than the 0.25-point move approved.
US Fed FOMC Meeting, Rate Cut Live Updates: Fed slashes interest by 25bps
Fed decided to cut interest rates by 25bps lowering the federal funds rate to 3.5%–3.75%. Policymakers said this is due to a change in the balance of risks facing the economy.
The latest data shows the U.S. economy is growing at a moderate pace. Job gains have slowed this year, and the unemployment rate has risen slightly through September. Inflation has also moved higher compared to earlier in the year and remains somewhat elevated.
The Federal Reserve aims to keep the economy at maximum employment and maintain 2% inflation over the long run. However, uncertainty around the economic outlook is still high, and the Fed says the risks to employment have increased in recent months.