In a tense and unusually divided meeting, the U.S. Federal Reserve decided to cut interest rates by 0.25 percentage points to a range of 3.5% to 3.75%. This is the third consecutive rate cut since September, as concerns about a deteriorating labor market outweigh fears of rising inflation. The final meeting of the year also yielded new economic forecasts and offered some clues about the Fed's roadmap for 2026.
Wall Street expects the Fed to cut rates by 0.25% next week, though some are speculating Jerome Powell could deliver a "jumbo" 0.5% move, given how weak recent labor market data has been. Global markets and U.S. S&P 500 futures rose on expectations of cheaper money, but there are still two more rounds of inflation data prior to the Fed's call.
