The US Federal Reserve reduced its key target interest rate by a quarter percentage point to a range of 3.50%-3.75%, in line with expectations, and said it would start buying treasuries.
Markets Are Little Changed After Divided Fed Governors Vote for 0.25% Rate Cut
10 December 2025 - 20:30 CET
By Giles Broom
The Federal Open Market Committee (FOMC) said economic activity has been expanding at a “moderate pace,” but job gains have slowed, and unemployment has edged higher, according to a statement. Inflation “has moved up since earlier in the year and remains somewhat elevated,” the statement noted, without referring specifically to the causes.
Overall, the Fed continued to guide markets that uncertainty about the US economy's outlook remains “elevated”.
Muted market reaction
Financial markets were little changed on the news with the S&P 500 index of US equities nudging 0.3% higher and Bitcoin briefly climbing a little over 1% in the 10 minutes following the 19:00 UTC report before trading in a similar $92,500-93,000 range. US treasury yields saw slight declines.
Fed Chair Jerome Powell faced three dissenters from the board of 12 governors, with Austan Goolsbee joining Jeffrey Schmid in proposing no change in the main interest rate decision. Stephen Miran continued to advocate for a more significant rate cut, following a line often expressed by the White House this year.
The Chair's press conference, which begins 30 minutes after the rate announcement, was initially well received by Bitcoin traders who sent the cryptocurrency a little higher as Powell began to speak. Aside from a brief jitter when Powell was almost perceived to be guiding that the Fed might not be cutting rates again for a while, market moves were very limited as the media briefing ran on.
Treasury purchases
That leaves investors pondering whether to perceive the Fed’s latest move as somewhat more dovish than expected, especially as the FOMC also said it would initiate a new schedule of reserve management purchases (RMPs) in the coming days.
The FOMC directed the Federal Reserve Bank of New York to begin about $40bn worth of shorter-term Treasury bill purchases on 12 Dec after the central bank sufficiently shrunk its balance sheet through recent actions, according to a separate statement by the New York-based institution.
