Fed Poised to Cut Rates Again as Economy Shows Signs of Slowing
Dec 7, 2025 By MarketDepth
The Federal Open Market Committee (FOMC) — the policy-making body of the U.S. Federal Reserve — is widely expected to lower its benchmark interest rate by 25 basis points at its meeting on December 9–10, marking the third cut of the year.
The case for a rate cut has grown stronger after recent reports signaled cooling labour-market momentum. Private employers reportedly shed 32,000 jobs in November — a stronger decline than economists expected — reinforcing worries about economic slowdown. Meanwhile, some Fed officials have adopted a dovish tone, suggesting that looser monetary policy could support a fragile recovery.
Still, the decision remains controversial within the Fed. A number of policy-makers remain wary of cutting rates further while inflation remains above the central bank’s long-term target. As a result, the vote could be tighter than previous ones, and markets are carefully watching the minutes for signals about future moves — including whether further cuts might come in 2026.
Financial markets have responded with cautious optimism: traders are pricing in an approximate 85–90% chance of a rate cut this week. U.S. stock futures are trading nearly flat ahead of the decision, as investors await not just the rate action — but also post-meeting remarks by Fed Chair Jerome Powell for guidance on inflation, employment, and the central bank’s outlook for 2026.
If the cut proceeds, economists warn it could deepen divisions over the Fed’s dual mandate — balancing price stability and employment. While cheaper borrowing costs might provide a boost to consumer spending and investment, critics argue that further rate cuts risk reigniting inflation or prolonging financial distortions.
Links
- https://www.ft.com/content/7d41313c-fb16-409c-b54d-4821937caa33
- https://www.investopedia.com/what-to-expect-in-markets-this-week-fed-interest-rate-decision-powell-remarks-earnings-from-oracle-broadcom-gamestop-orcl-avgo-gme-11862148
- https://www.ft.com/content/12044d47-9498-4df2-9840-be4514366a99
- https://www.ft.com/content/6295565b-3e00-49bf-8150-93f920f8831f
- https://www.reuters.com/business/jumped-gun-says-morgan-stanley-reverses-dec-fed-rate-call-25bps-cut-2025-12-05/
- https://www.reuters.com/world/china/global-markets-global-markets-2025-12-08/
- https://www.marketwatch.com/story/u-s-stock-futures-flat-as-investors-await-fed-meeting-and-likely-a-rate-cut-ecf9f5bc
- https://www.ft.com/content/6295565b-3e00-49bf-8150-93f920f8831f
