The Federal Reserve announced on December 10, 2025, that it will lower the target range for the federal funds rate by a quarter percentage point to between 3.5% and 3.75%. This decision comes as recent data indicate moderate economic growth, slower job gains, and a slight increase in the unemployment rate through September. Inflation has also risen since earlier in the year and remains higher than desired.
The Federal Open Market Committee (FOMC) stated, “The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent 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 emphasized its commitment to supporting maximum employment and bringing inflation back to its 2 percent goal. “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,” according to their statement.
Looking ahead, policymakers said they would continue monitoring economic information closely: “In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals. The Committee’s assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.”
Additionally, with reserve balances now at what they consider ample levels, “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.”
Voting in favor of lowering rates were Jerome H. Powell (Chair), John C. Williams (Vice Chair), Michael S. Barr, Michelle W. Bowman, Susan M. Collins, Lisa D. Cook, Philip N. Jefferson, Alberto G. Musalem, and Christopher J. Waller.
Stephen I. Miran voted against this action because he preferred a larger cut; Austan D. Goolsbee and Jeffrey R. Schmid opposed any change at this meeting.
For media inquiries regarding this announcement from the Federal Reserve, contact [email protected] or call 202-452-2955.
