✨On December 10, 2025, Federal Reserve Chairman Jerome Powell announced a 25 basis point interest rate cut to the 3.50%-3.75% range following the FOMC meeting. This marked the third cut in 2025 and was approved despite three dissenting votes. Powell emphasized that inflation exceeding the 2% target was largely due to import tariffs imposed by the Trump administration, stating that this effect would lessen in the second half of 2026 and that this was a one-off adjustment. Warning about the labor market, Powell noted that federal data showed a monthly surplus of 60,000 jobs, suggesting that the market might actually be contracting; this signaled a pause consistent with the Fed's "dot plot," which projects only one additional rate cut for 2026. Powell stated that consumer spending remains strong, but the housing sector is weak, emphasizing that justifying further rate cuts is becoming more difficult and that they will monitor the evolution of the economy, adding, "there is no risk-free path."

✨ Key points from Powell's statement:

• Risks to the job market have increased.

• The Fed believes that recent job increases are more than 60,000.

• US inflation "remains somewhat high."

• GDP growth forecast for 2026 has been raised.

• Current interest rates are in a "reasonable neutral range."

• Inflation data has risen due to "increased" goods inflation.

• Three Federal Reserve officials opposed today's policy decision.

• Recent rate cuts should help stabilize the job market.

• The Fed anticipates only one rate cut in 2026.

• Everyone at the table (FOMC) agrees that inflation is too high.

• Interest rates will either remain stable, be slightly reduced, or significantly reduced.

• Evidence is mounting that services inflation is falling and goods inflation is entirely driven by tariffs.

• Without new tariff announcements, goods inflation is expected to peak in the first quarter of 2026.

• The Fed will set a 2% inflation target.

• A large portion of the inflation increase is actually caused by tariffs.

#DecemberMarketOutlook