Fed Drops 25 Basis Points in 3rd Rate Cut of the Year

SECAUCUS, NJ (DTN) – The Federal Reserve on Wednesday (12/10) cut U.S. interest rates by 25 basis points, or a quarter percentage point, for a third straight time in an effort to strengthen a sluggish U.S. labor market.

“In support of its goals and in light of the shift in the balance of risks, the Committee decided to lower the target range for the federal funds rate by 1/4 percentage point to 3-1/2 to 3‑3/4 percent,” the Federal Open Market Committee, which decides on rates for the Fed, said in a statement.

The Fed has a dual mandate of creating maximum employment opportunities across the U.S. economy while keeping prices stable.

Prior to Wednesday’s widely-expected cut, the central bank made similar 25-basis point reductions in September and October after economists cautioned that rising unemployment could tip the economy into a recession. Private payrolls fell by 32,000 in November while unemployment rate hit a near four-year high of 4.4%.

The latest rate cut bring key U.S. lending rates to a range of between 3.75% and 4%, from the 4.5%-4.75% range before the reductions that began in September.

The Fed has another eight rate decisions to make in 2026.