Fed Cuts a Third Time, to 3.50%-3.75%, Over Three Dissents
Policymakers lowered the benchmark rate again in December despite an incomplete data picture, while their projections pointed to only one more cut in all of 2026.
WASHINGTON — The Federal Reserve cut its benchmark interest rate by a quarter point on Wednesday, to a target range of 3.50% to 3.75%, completing a third reduction of 2025 in the face of three dissenting votes and an unusually thin set of economic data.
The committee met with statistical releases still catching up from the 43-day government shutdown that ended in mid-November. Officials described the decision as risk management: with hiring slowing and the informational fog thick, the cost of being slightly too easy looked smaller than the cost of being too tight.
The dot plot did the real talking
The quarterly projections were more restrictive than the decision. The median policymaker penciled in just one additional cut across all of 2026 and one more in 2027, with the funds rate settling near 3% over the longer run.
That is a considerably shallower path than markets had assumed in the autumn, and it functioned as a signal that the committee viewed itself as close to the end of its easing cycle rather than in the middle of one.
Three ways to dissent
Dissents at the Fed are usually one-directional. This time they were not uniform in reasoning. Some members objected to easing while inflation remained above target; others questioned cutting into data they could not fully see.
What came next
In hindsight, the December meeting marks the low point of this cycle's policy rate. The January meeting held steady. Then the energy shock of late February pushed headline inflation back toward 4%, and the conversation shifted from how many more cuts to whether the next move might be an increase.
The committee has not moved rates since.
