According to the latest update from Yahoo Finance, the Federal Reserve lowered interest rates by 0.25% at the close of its two-day meeting. The move marks the third rate cut this year and immediately lifted risk sentiment across global markets.
A Split Decision Inside the Fed
Policymakers cut the benchmark range to 3.50%–3.75%. However, the vote exposed clear divisions. Some officials pushed to hold rates steady, while one member argued for a larger 50-basis-point cut. This split highlights how difficult it remains to balance inflation control with economic stability.
During the press briefing, the Fed Chair noted that the central bank faces a “challenging” setup. He explained that both sides of the mandate — price stability and employment — continue to pull in different directions.
Markets Respond With Strong Gains
The rate cut triggered a swift rally. The S&P 500 ended the session just shy of a new record. Meanwhile, the Russell 2000 climbed to an all-time high as investors rotated into small-cap stocks. This momentum signals that markets expect policy support to continue into the new year.
Economic Projections Updated for 2025 and Beyond
The central bank also released its final Summary of Economic Projections for 2025. The document outlines policymakers’ expectations on growth, inflation and interest rates. The median projection points to one additional rate cut in 2026.
This aligns with earlier forecasts from September and suggests a cautious path forward rather than an aggressive easing cycle. The latest policy move reinforces how the Fed aims to support economic stability while acknowledging lingering uncertainties. Market reaction shows investors remain highly responsive to each shift in the central bank’s tone.
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Source: Yahoo Finance
