Divided Fed approves third rate cut this year, sees slower pace ahead

The Federal Reserve cut its key interest rate by a quarter percentage point to 3.5%-3.75%, reflecting a “hawkish cut” amid internal divisions, with three members voting against the decision.

Chair Jerome Powell emphasized a cautious approach, saying the Fed is well-positioned to monitor economic developments before making further moves, while the dot plot shows only limited rate cuts expected in 2026 and 2027.

The committee raised its GDP growth forecast for 2026 to 2.3% and noted inflation remains above its 2% target, at 2.8% in September.

Alongside the rate cut, the Fed will resume Treasury purchases to address pressures in overnight funding markets, starting with $40 billion in Treasury bills, CNBC has reported.

The decision comes as Powell nears the end of his term and President Trump prepares to nominate a successor, potentially favoring a candidate inclined toward lower rates.

read more: https://www.cnbc.com/2025/12/10/fed-interest-rate-decision-december-2025-.html

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