December 10, 2025—The Federal Open Market Committee (FOMC) concluded its final meeting of the year today, announcing the widely-anticipated 25 basis point rate cut, moving the benchmark rate to a new range of 3.50% to 3.75%, the third straight rate cut in 2025. The vote was split 9-3, with one voter favoring a 50-basis point cut, and two other voting to hold rates steady.
The decision comes as the FOMC is focusing on conflicting economic conditions. Inflation has been gradually growing, with the PCE Index rising from 2.6% over the summer to 2.8% in September. The FOMC’s dual mandate targets a long-term inflation rate of 2.0% as well as full employment. The labor market has softened in recent months, with the unemployment rate rising to 4.4% in September.
The FOMC also released the “dot plot” graph that shows the expectation of future rate movements. The graph indicated that FOMC voters expect one rate cut in 2026 and another in 2027. The disparity of the projections indicated diverging opinions within the committee about where rates are going. Along with the two “no” dovish votes on the rate cut, four other nonvoting members registered “soft dissents,” as they disagreed with the decision.
Seven officials also indicated they want no cuts next year. FOMC meetings feature 19 participants among the governors and regional presidents, with only 12 members allowed to vote on a rotating basis.
In his post-meeting press conference, Fed Chair Jerome Powell cited tariff uncertainty as the reason inflation remains elevated, and that weakness in the job market has become an issue. “Our obligation is to make sure that a one-time increase in the price level does not become an ongoing inflation problem, but with downside risks to employment having risen in recent months, the balance of risks has shifted. Our framework calls for us to take a balanced approach in promoting both sides of our dual mandate,” he said.