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Fed meeting live coverage: Federal Reserve cuts interest rates by 25 basis points in split decision
Myles Udlandand
Grace O'DonnellUpdated
Wed, December 10, 2025 at 3:34 PM EST
1 min read
The Federal Reserve cut interest rates by 25 basis points at the conclusion of its two-day meeting on Wednesday, marking the central bank's third cut of the year.
Fed officials were split on the decision to lower rates to a range of 3.50%-3.75%, with policymakers dissenting on both sides. Chicago Fed president Austan Goolsbee and Kansas City Fed president Jeff Schmid favored holding rates steady, while Fed governor Stephen Miran favored a 50 basis point rate cut.
Along with its final policy decision of the year, the Fed also published its final Summary of Economic Projections (SEP) for 2025, which includes forecasts from Fed officials on economic growth, inflation, and interest rates for the coming years.
The SEP showed the Fed's median forecasts calling for one interest rate cut in 2026, in line with the projections made in September.
Here are the latest updates and analysis on the Fed's policy decision.
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33 updates
- Featured 57 mins ago Grace O'Donnell
Powell: 'There is no risk-free path'
Fed Chair Powell reiterated that the Fed has tilted the balance of its risk-management framework toward the labor market after previously favoring the inflation mandate.
"There is no risk-free path for policy as we navigate this tension between our employment and inflation goals," Powell said in his prepared remarks.
"A reasonable base case is that the effects of tariffs on inflation will be relatively short-lived, effectively a one-time shift in the price level," he continued. "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."
- 6 mins ago Grace O'Donnell
Fed Chair Powell on his legacy at the Fed
Here's Fed Chair Powell's response when asked what he wants his legacy as Fed chair to be:
When asked if he would stay on the Fed Board of Governors after his term as chair expires, Powell only stated: "I'm focused on my remaining time as chair."
- 17 mins ago Grace O'Donnell
Powell says Fed rate cut won't do much to help the housing market
The housing market's affordability challenges aren't likely to be solved anytime soon by the Fed, Chair Powell said.
"I don't know that a 25 basis point decline in the federal funds rate is going to make much of a difference for people," Powell said.
He noted that low housing supply and favorable mortgage rates during the pandemic era, which are keeping people in their homes, are the main factors creating "significant challenges." Powell added and that those secular issues are unlikely to change in the near term. Currently, the average 30-year fixed-rate mortgage rate is holding above 6%.
"So housing is going to be a problem," Powell said. "We can raise and lower interest rates, but we don't really have the tools to address a structural housing shortage."
Read more: When will mortgage rates go down? Outlook after the Fed meeting.
20 mins ago Brooke DiPalma
Why Wall Street is calling Wednesday a 'hawkish cut'
The Federal Reserve cut interest rates by a quarter-point on Wednesday.
Capital Economics, among other Wall Street firms, characterized the decision as "hawkish cut," with the Fed pushing back against more aggressive rate cuts in 2026.
"The new Summary of Economics Projections (SEP) shows that the FOMC still expects one more interest rate cut next year, but the range of projections is unusually wide, even if we exclude Stephen Miran’s extreme views. Either way, we doubt that the Fed will cut again until after a new Chair replaces Jerome Powell in May," Capital Economics economist Stephen Brown wrote in a note to clients.
The Fed expects one more interest rate cut next year, according to its latest dot plot published along with its Summary of Economic Projections (SEP) on Wednesday.
Beyond Stephen Miran, who called for a 50 basis point cut, there were also two other dissents, with Kansas City Fed president Jeffrey Schmid and Chicago Fed president Austan Goolsbee both preferring no cuts at this meeting.
Brown added: "Unsurprisingly given that division, the statement signaled a pause from here, noting that the FOMC will now consider 'the extent and timing of additional adjustments to the target range.'"
24 mins ago Myles Udland Powell people losing jobs to AI is 'not a big part of the story yet'
The AI revolution is here, we're told.
But how much that is weighing on the US labor market doesn't seem clear yet, according to Federal Reserve Chair Jay Powell.
"[It's] probably part of the story. It's not a big part of the story yet, and we don't know whether it will be," Powell said. "But you know, for example, ... you can't miss the big announcements of layoffs and also companies saying that they're not going to hire anybody for a long time, and they cite AI. That's all clearly happening."
Powell also noted, however, that unemployment insurance claims are not rising while data suggests job finding rates are low, a situation Powell called " a little bit curious."
The Fed chair added that while previous cycles of tech innovation have generally seen some jobs destroyed and others created, "when you get through all that, you have higher productivity and you have new jobs, and there are enough jobs for people."
"What will happen here? We're going to have to see," Powell said.
- 31 mins ago Grace O'Donnell
Stocks climb to session highs after Powell discounts rate hike
Stocks climbed to session highs after Fed Chair Powell said that he doesn't expect a rate hike in January.
The S&P 500 (^GSPC) rose 0.75%, putting it on track for a record high close. The Dow Jones Industrial Average (^DJI) climbed 1.2%, or over 500 points. The tech-heavy Nasdaq Composite (^IXIC) was trading advanced 0.4%.
- 42 mins ago Grace O'Donnell
Fed to cast 'skeptical eye' on shutdown-distorted economic data
Fed Chair Powell noted that the Fed will cast a "skeptical" eye on the incoming influx of labor market and inflation data as it contemplates its next decision at the January FOMC meeting.
"We're going to need to be careful in assessing, particularly the household survey data," Powell said, referring to the Consumer Price Index, specifically. "There are very technical reasons about the way data are collected in some of these measures, ... so that the data may be distorted."
The government shutdown, which created a data vacuum in October and November, created a backlog of standard economic reports — some of which were canceled, some of which were delayed. Next week, the Bureau of Labor Statistics will publish its monthly employment situation report for October and November.
"We're going to get data, but we're going to have to look at it carefully and with a somewhat skeptical eye," Powell said. "We will have a lot of the December data by the time of the January [meeting], so we expect to see a lot more. But I'm just saying that the what we get for, for example, CPI or for the, for the household survey, we're going to we're going to look, we're going to look at that really carefully and understand that it may be distorted..."
- 44 mins ago Myles Udland
Powell doesn't expect the Federal Reserve's next move to be a rate hike
The last two times the Federal Reserve cut interest rates by 0.25% in three consecutive meetings — first in 1996-97, then in 1998 — the central bank's next move was a rate hike.
Fed Chair Jay Powell does not see history repeating.
Asked by The Wall Street Journal's Nick Timiraos about the historical parallels and whether Powell sees the Fed's next move as a genuinely equal-weighted decision on a rate cut or rate hike, the Fed chair was clear: the next move for the central bank will not be higher.
"I don't think that a rate hike is ... anybody's base case at this point," Powell said.
Powell added that, "some people feel we should stop here and that we're at the right place and just wait. Some people feel like we should cut once or more this year and next year, but when people are writing down their estimates of policy of where it should go, it is either holding here or cutting a little or cutting more than a little."
- 53 mins ago Myles Udland
3 reasons Powell sees the US economy improving in 2026
Like many forecasters on Wall Street, Fed Chair Jay Powell sees three key factors helping the US economy in 2026 — consumer spending, AI, and fiscal policy.
Asked about the Fed's new economic forecasts which sees GDP growing 2.3% next year after 1.7% growth in 2025, Powell said, "[It's] partly that consumer spending has held up. It's been resilient.
"And to another degree it is ... that AI spending on data centers and [spending] related to AI has been holding up business investment."
"Fiscal policy is going to be supportive," Powell added. "And, as I mentioned, AI spending will continue. The consumer continues to spend. So it looks like the baseline would be solid growth next year."
- Today at 7:31 PM UTC Grace O'Donnell
The Fed's press conference starts...
The Federal Reserve's post-decision press conference has just started. Watch Chair Jerome Powell's remarks below or on Yahoo Finance.
- Today at 7:25 PM UTC Myles Udland
The Federal Reserve does not think the labor market is getting worse
The Federal Reserve has a view on the labor market that does not seem to be shared by many Americans.
Namely, that it is set to improve — and fairly dramatically — next year.
The central bank's latest Summary of Economic Projections released Wednesday showed that while 7 officials think the unemployment rate may end up as high as 4.7% by the end of 2025, only one official fears it will stay in this range by the end of next year. And all of the 18 other officials who offered forecasts this month expect the unemployment rate to be 4.5% or lower by the end of next year.
In other words, the labor market is set to either stop deteriorating or actually improve in 2026. As of September, the latest month for which we have data, the unemployment rate stood at 4.4%, the highest since Oct. 2021.
Take the University of Michigan's latest consumer sentiment survey as an example — the labor outlook remained "dismal" said Joanne Hsu, director of the survey.
And data from Challenger, Gray & Christmas showed October had the highest number of job cut announcements for that month in three years during a year that has seen a sharp rise in layoff plans from major companies across the business world.
Fed officials, however, seem to view this as something like a nadir for the labor market as we head into 2026.
Today at 7:21 PM UTC Michael B. Kelley Fed announcement early reactions and instant analysis
Here's a roundup of a few observations from economic experts on X:
Watch the press conference with Fed Chair Jerome Powell on finance.yahoo.com
- Today at 7:13 PM UTC Myles Udland
Stocks rise, small caps hit record after the Fed announcement
The initial reaction to the Federal Reserve's rate cut on Wednesday is triggering a modest rally in stocks, with all three major indexes turning positive, but the big winner is the small-cap Russell 2000.
The index was trading at a record in the aftermath of the Fed's announcement, as the index tries to sustainably recapture and move above the record high it set back in 2021.
While the AI boom has lifted the S&P 500, Dow, and Nasdaq to record levels, small caps have been left behind. At least until now.
- Today at 7:08 PM UTC
Three Fed officials vote against Wednesday's rate cut
Another key takeaway from Wednesday's announcement from the Fed is that three officials voted against the 0.25% rate cut.
And these dissents came in both directions.
As he has done now at three straight meetings, Fed governor Stephen Miran would have preferred a 0.50% reduction in the Fed's target range.
Jeff Schmid, president of the Kansas City Fed, voted to keep rates unchanged for the second straight meeting, and was joined by Chicago Fed president Austan Goolsbee in this view.
This marked the first time since 2019 that three Fed officials voted against a policy action.
- Today at 7:04 PM UTC Myles Udland
The Fed expects to cut rates one time in 2026
Along with its policy announcement on Wednesday, the Federal Reserve also released new economic forecasts, which showed officials broadly optimistic about the economy in 2026 with the impetus for further policy changes looking muted.
The Fed's "dot plot," which showed expectations for future rate cuts, projects just one additional 0.25% rate cut in 2026, while forecasts on the unemployment rate see it moving from 4.5% at the end of this year to 4.4% at the end of next.
GDP growth in 2026 is expected to accelerate to 2.3% from 1.7% in 2025, and inflation is expected to cool, with core PCE rising 2.5% by the end of 2025, down from 3% at the end of this year.
- Today at 7:00 PM UTC Myles Udland
Federal Reserve cuts interest rates, as expected
The Federal Reserve cut interest rates by 0.25% on Wednesday, as expected.
This marks the third straight meeting the central bank cut rates and brings its benchmark Fed funds rate into a range of 3.5%-3.75%, the lowest since Oct. 2022.
- Today at 6:39 PM UTC Michael B. Kelley
Small caps trading near record highs ahead of Fed decision
The Russell 2000 Index (^RUT), which tracks the smallest 2,000 stocks on the market, is trading around record highs ahead of the Fed decision:
About 40% of companies in the Russell 2000 have negative earnings.
- Today at 6:00 PM UTC Grace O'Donnell
What is the Fed's dot plot?
Today, the Federal Reserve will issue its quarterly update on where rate-setters expect interest rates and other economic indicators to head in 2026 and beyond.
Fed watchers will be particularly keen to get their hands on December's Summary of Economic Projections, also known as the dot plot, as it will show how the Fed's top policymakers think the Fed will change short-term interest rates over the next few years, as well as the degree of consensus among members.
Yahoo Finance's Sarah C. Brady explains that there are up to 19 dots on the Fed's dot plot, each one representing the prediction of one anonymous member of the Federal Reserve Board. Those predictions are updated at each FOMC meeting based on a review of what's happening with the economy and the outcomes each member believes are most likely in the future.
The Federal Reserve began publishing the chart in 2012 as part of an effort to increase transparency around its policies. After December, the next dot plots will be published in March, June, and September.
However, the chart has its limitations; namely, that it's only minimally accurate in estimating rates with a one-year horizon and not at all accurate in predicting rates two or more years in advance.
According to Fed Chair Jerome Powell, "The dots are not a great forecaster of future rate moves," and there is actually "no great forecaster."
Check out our full breakdown of how to interpret the dot plot or watch the explainer below.
Today at 5:52 PM UTC Brian Sozzi
Good point on the outlook for rates...
Yahoo Finance is live all day from inside the HQ of alternative asset management giant Apollo Global Management (APO). (Disclosure: Yahoo Finance is owned by Apollo Global Management.)
I just had a good chat with the co-president of the company's big Athene retirement business (they are a player in annuities), Mike Downing. Keep in mind what happens to savers should the Fed cut rates again — savers are going to have to get more creative to earn better returns. That could push them more into stocks, assuming they are not already heavily allocated to them.
We all like to think about the impact of rates on investors, but don't forget that retirees are a large component of that.
Be on the lookout for my chat with Apollo CEO Marc Rowan on Yahoo Finance this afternoon.
- Today at 4:00 PM UTC Grace O'Donnell
Expect a 'hawkish cut' today as officials look to slow down on interest rate cuts next year
Yahoo Finance's Jennifer Schonberger reports:
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