Federal Reserve cuts key rates by 25 basis points but signals higher bar for future reductions

The US Federal Reserve on Wednesday (December 10) cut its key interest rate for the third consecutive time and indicated it may keep rates steady in the coming months, a decision that could draw criticism from US President Donald Trump, who has called for sharper reductions in borrowing costs.

After its two-day meeting, the Fed’s policy committee said it could hold interest rates steady in the months ahead. In its quarterly economic projections, officials also indicated they expect only one rate cut over the next year.

Wednesday’s decision lowered the benchmark rate to around 3.6%, its lowest level in nearly three years. The reduction is expected to ease borrowing costs for mortgages, auto loans and credit cards over time, although market conditions can influence how quickly those changes are passed on.



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Three Fed officials dissented from the move, the most dissents in six years and a sign of deep divisions on a committee that traditionally works by consensus. Two officials voted to keep the Fed’s rate unchanged, while Stephen Miran, whom Trump appointed in September, voted for a half-point cut.



December’s meeting could usher in a more contentious period for the Fed. Officials are split between those who support reducing rates to bolster hiring and those who’d prefer to keep rates unchanged because inflation remains above the central bank’s 2% target. Unless inflation shows clear signs of coming fully under control, or unemployment worsens, those divisions will likely remain.