Dec 16, 2025
At its December 10, 2025, meeting, the U.S. Federal Reserve (Fed) cut the federal funds target rate by 0.25 percentage points. This brought the benchmark rate down to a range of 3.50%–3.75%, the lowest level in nearly three years. This was the third consecutive rate cut in 2025, signaling the Fed’s shift toward a more accommodative monetary policy amid signs of slower job growth and persistent inflation above the 2% target. The decision reflected concern about economic slowing and downside risk to the labor market, even though inflation remains somewhat elevated. Officials remain divided on future cuts in 2026, with some expecting further easing and others forecasting unchanged or even higher rates.
The Fed announced its rate decision alongside updated economic projections. Inflation forecasts were revised slightly downward compared to September: core PCE was cut to 3.0% for 2025 and 2.5% for 2026, while headline PCE was lowered to 2.9% for 2025 and 2.4% for 2026.
Growth forecasts were revised upward, with 2025 raised to 1.8% and 2026 to 2.3%. Unemployment projections remained unchanged at 4.5% for 2025 and 4.4% for 2026.
The Fed announced that, starting on December 12, it will begin purchasing $40 billion per month in U.S. Treasury bills in order to rebuild reserves in the financial system. This could be good news for mortgage rates, as Treasury bill yields may decline.
Propbee Economics Team
Dec 16, 2025
At its December 10, 2025, meeting, the U.S. Federal Reserve (Fed) cut the federal funds target rate by 0.25 percentage points. This brought the benchmark rate down to a range of 3.50%–3.75%, the lowest level in nearly three years. This was the third consecutive rate cut in 2025, signaling the Fed’s shift toward a more accommodative monetary policy amid signs of slower job growth and persistent inflation above the 2% target. The decision reflected concern about economic slowing and downside risk to the labor market, even though inflation remains somewhat elevated. Officials remain divided on future cuts in 2026, with some expecting further easing and others forecasting unchanged or even higher rates.
The Fed announced its rate decision alongside updated economic projections. Inflation forecasts were revised slightly downward compared to September: core PCE was cut to 3.0% for 2025 and 2.5% for 2026, while headline PCE was lowered to 2.9% for 2025 and 2.4% for 2026.
Growth forecasts were revised upward, with 2025 raised to 1.8% and 2026 to 2.3%. Unemployment projections remained unchanged at 4.5% for 2025 and 4.4% for 2026.
The Fed announced that, starting on December 12, it will begin purchasing $40 billion per month in U.S. Treasury bills in order to rebuild reserves in the financial system. This could be good news for mortgage rates, as Treasury bill yields may decline.
Propbee Economics Team
