Topline
The Federal Reserve opted to cut interest rates on Wednesday, its third straight vote in favor of a cut, as Wall Street expected the central bank to take a cautious approach to monetary policy next year.
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Key facts
The Federal Open Market Committee voted 9-3 in favor of cutting rates by a quarter of a percentage point to between 3.5% and 3.75%, down from the 3.75% and 4% range the central bank approved at the October FOMC meeting.
Three Fed officials disagreed for the first time since September 2019: Fed Governor Stephen Miran favored lowering the range by half a point, while Chicago Fed President Austan Goolsbee and Kansas City Fed President Jeffrey Schmid favored leaving rates unchanged.
The Fed’s “dot plot,” which outlines the central bank’s policy expectations, indicates that only one quarter-point rate cut is expected in 2026, and another in 2027, when the fund rate is expected to reach a target rate of 3% to 3.25%.
The Fed’s statement was amended to say it would consider the “magnitude and timing of additional adjustments” to interest rates — language the central bank last used in December 2024, after which the FOMC opted not to approve cuts until September.
What to pay attention to
How Powell is tackling future rate cuts Analysts at Goldman Sachs wrote this week that they expect Powell will suggest that the bar for further cuts “has been raised,” and that five Fed officials are likely to be cautious about further rate cuts.
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