US Fed meet: Powell-led FOMC trims key rate by 25 bps, taking it to lowest level since 2022

Washington, DC [US], December 11 : The United States Federal Reserve cut its benchmark interest rate by 0.25 percentage points, bringing the federal funds rate to its lowest level in more than three years, CBS News reported.

The new target range now stands between 3.5 per cent and 3.75 per cent, down from 3.75 per cent to 4 per cent.

This marks the Fed's third consecutive rate cut since September, reducing the rate by a total of 0.75 percentage points this year.

CBS News noted that although key government economic data has been delayed due to the recent US government shutdown, the Fed has been closely tracking weakening job growth and persistent inflation.

Data from ADP showed employers shed 32,000 jobs in November, signalling further pressure on the labour market.

In its accompanying statement, the Federal Open Market Committee said, "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."

CBS News reported that new quarterly projections indicate Fed officials expect to cut rates only once in 2026.

The Fed also released updated expectations for inflation, economic growth and unemployment for 2026. Officials forecast the Personal Consumption Expenditures index the Fed's preferred inflation measure will ease to 2.4 per cent next year, compared with a median estimate of 2.9 per cent for 2025.

Economic growth is projected to rise to 2.3 per cent in 2026, while unemployment is expected to remain at 4.4 per cent.

Ryan Sweet, chief global economist at Oxford Economics, said the latest guidance suggests an "extended pause" in the Fed's rate-cutting cycle.

He told investors, "The Fed isn't going to be able to help the labor market because of what ails it... Monetary policy can't solve many of these issues."

CBS News highlighted that this reduction brings the federal funds rate to its lowest point since early November 2022, when the Fed was raising rates aggressively during a surge in pandemic-era inflation.

Lower rates are intended to stimulate hiring and spending by making credit more affordable for businesses and consumers.

However, the decision was not unanimous. Fed Chair Jerome Powell and eight committee members voted for the quarter-point cut, while three dissentedthe highest number of dissents in six years.

CBS News reported that Austan Goolsbee and Jeffrey Schmid preferred to keep rates unchanged, while Stephen Miran supported a 0.5-percentage-point cut.

The rate move comes as the Federal Reserve approaches a leadership transition. Powell's term as chair ends in May 2026, and US President Donald Trump is preparing to nominate his successor.

In an email cited by CBS News, Jeff Schulze of ClearBridge Investments said, "[T]he outlook from the Powell-led FOMC bears less than usual on future Fed policy decisions given the imminent change in leadership."

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