FOMC Monetary Policy Meeting 10 December 2025
Very dovish presser
In Jerome Powell’s FOMC press conference on December 10, 2025, the Fed announced a 25 basis point rate cut to 3.5-3.75%, the third consecutive reduction, aimed at supporting the labor market while guiding inflation toward 2%. Economic projections showed GDP growth at 1.7% for 2025 rising to 2.3% in 2026, unemployment steady around 4.5%, and PCE inflation easing from 2.9% to 2.4% next year before hitting target.
On reserve management, Powell emphasised maintaining an ample supply of reserves to ensure effective control of the federal funds rate via administered rates, without day-to-day interventions.
The FOMC will initiate purchases of shorter-term Treasury securities (mainly bills) starting at $40 billion in the first month, potentially elevated briefly before tapering based on conditions, solely to sustain reserve levels.
Reserve balances are now at ample levels, supported by unlimited standing repo operations to keep rates in target.
The decision to cut the federal funds rate by 25 basis points passed with a 9-3 vote, marking notable dissensions within the committee.
The three dissenting voters were:
Governor Stephen I. Miran, who advocated for a larger 50 basis point reduction (dovish dissent).
Presidents Austan D. Goolsbee (Chicago Fed) and Jeffrey R. Schmid (Kansas City Fed), who preferred holding rates steady (hawkish dissents).
This split reflects ongoing debates on the pace of easing amid inflation and labor market concerns.