Federal Reserve Cuts Rates 25 Basis Points, With Two Members Voting for Steady Policy

The U.S. Federal Reserve delivered a widely expected 25 basis point rate cut on Wednesday, lowering the range on its benchmark fed funds rate by 25 basis points to 3.50% to 3.75%. This marks the third straight quarter point reduction and brings short-term borrowing costs to their lowest level since 2022.

“Uncertainty about the economic outlook remains elevated,” said the Fed in its policy statement. “The Committee is attentive to the risks to both sides of its dual mandate and judges that downside risks to employment rose in recent months.”

The Fed in its statement also noted that reserve balances had declined and said it intends to begin purchases of shorter-term Treasury paper as needed to “maintain an ample supply of reserves.”

The price of bitcoin BTC$92,804.76 was volatile in the minutes following the news, but remaining around the $92,400 level. U.S. stocks moved modestly higher and the 10-year Treasury yield dipped two basis points to 4.15%

Today’s rate cut is of particular note given the unusually large amount of public dissension among Fed members about the course of monetary policy. Several in recent weeks had loudly voiced their opposition ahead of time to not just today’s easing, but also the central bank’s 25 basis point reduction at its previous meeting in October.

Indeed two members — the Kansas City Fed’s Jeffrey Schmid and the Chicago Fed’s Austan Goolsbee — voted to hold policy steady. A third member, Fed Governor Stephen Miran — a recent Trump appointee — voted for a 50 basis point cut.

Alongside the policy decision, this Fed meeting came with an updated set of the central bank’s economic projections.

Core inflation is now seen at 3% for 2025 and 2.5% for 2026, each down 10 basis points from previous estimates. GDP growth is new expected to be 1.7% this year and 2.3% in 2026, up from previously estimated 1.6% and 1.8%, respectively.

The so-called “dot plot” is little-changed, with policymakers still seeing just one rate cut in 2026 even as markets have priced in two rate cuts next year.

Today’s news comes at a moment when policymakers are still operating without several key economic data releases that remain delayed or suspended due to the U.S. government shutdown. Also at play is President Trump’s continued bashing of current Fed Chair Jerome Powell alongside his search for a replacement when Powell’s term as chair ends next year.

Attention now turns to Powell’s post-meeting press conference at 2:30 pm ET, where listeners will try and further discern his and the Fed’s thoughts on the future path of monetary policy. Prior to Powell’s appearance, traders have priced in a 24% chance of another rate cut in January, per CME FedWatch.