Federal Reserve Cuts Interest Rates Amid Economic Uncertainty
On December 10, 2025, the Federal Reserve reduced interest rates by a quarter point to a range of 3.5% to 3.75%, marking the third rate cut this year. The decision was made with a 9-3 vote, highlighting division within the Federal Open Market Committee despite Chair Jerome Powell's emphasis on unity.
The rate cut comes amid significant economic uncertainty driven by tariffs, President Trump's immigration crackdown, and extensive government spending cuts. Additionally, a recent government shutdown disrupted data collection, causing a lack of information from October and part of November, complicating assessments of price levels and employment.
Inflation increased to 3.0% in September from 2.3% in April, while unemployment rose to 4.4% in September from 4.0% in January. Officials expressed caution about further rate reductions in the upcoming year, warning that rapid cuts might accelerate inflation if economic conditions do not improve.
Chair Powell's term ends in May 2026, and President Trump is considering a replacement. Kevin Hassett has been floated as a potential nominee, with a decision expected within weeks.
