Full text of the Federal Reserve's decision: Cut interest rates by 25 basis points and buy 40 billion treasury bonds within 30 days
On December 10, 2025, local time, the Federal Reserve lowered the benchmark interest rate by 25 basis points to 3.50%-3.75% with a vote ratio of 9-3, cutting interest rates for the third consecutive session. The policy statement removed the description of the unemployment rate as “low.” The latest bitmap maintains the forecast for interest rate cuts of 25 basis points in 2026.
In addition, the Federal Reserve will purchase 40 billion US dollars of treasury bonds within 30 days starting December 12 to maintain an adequate supply of reserves.
Full text of interest rate decisions
Available data suggest that economic activity is expanding at a moderate pace. Employment growth has been slowing since this year, and the unemployment rate has risen as of September. More recent indicators are consistent with the above. Inflation has risen since the beginning of the year and is still at a high level.
The Commission's long-term goal is to achieve maximum employment and a 2% inflation rate. Uncertainty about the economic outlook remains high. The Commission is closely monitoring the risks at both ends of its dual mission and believes that downside risks in employment have increased in recent months.
To support these goals, and taking into account changes in risk balance, the committee decided to lower the federal funds rate target range by 25 basis points to 3.50% to 3.75%. In evaluating the extent and timing of further adjustments to the federal funds rate target range, the committee will carefully evaluate the latest data, the changing economic outlook, and risk balance. The Commission is strongly committed to supporting maximum employment and returning inflation to the 2% target.
In evaluating appropriate monetary policy positions, the Committee will continue to monitor the impact of the latest information on the economic outlook. If there is a risk that could hinder the achievement of the Committee's goals, the Committee will be prepared to adjust its monetary policy position in due course. The committee's judgment will take into account a wide range of information, including labor market conditions, inflationary pressures and inflation expectations, and developments in the financial and international situation.
The Committee believes that the balance of reserves has declined to a sufficient level and will initiate purchases of short-term US Treasury bonds as needed to maintain an adequate supply of reserves on an ongoing basis.
Voting for this monetary policy action were: Chairman Jerome H. Powell (Jerome H. Powell), Vice Chairman John C. Williams (John C. Williams), Michael S. Barr (Michael S. Barr), Michelle W. Bowman (Michelle W. Bowman), Susan M. Collins (Susan M. Collins), Lisa D. Cook (Lisa D. Cook), Philip N. Jefferson), Alberto G. Musalem (Alberto G. Musalem), and Christopher J. Waller (Christopher J. Waller). Those who voted against it were Stephen I. Miran (Stephen I. Miran), who is inclined to lower the federal funds rate target range by 1/2 percentage point at this meeting; as well as Austin D. Goolsbee (Austin D. Goolsbee) and Jeffrey R. Schmid (Jeffrey R. Schmid), who prefer to keep the federal funds rate target range unchanged at this meeting.
The median value of the Federal Reserve bitmap: interest rates will be cut by a total of 25 basis points in 2026
Decisions on the operation of monetary policy
To implement the monetary policy position announced by the Federal Open Market Committee in its statement of December 10, 2025, the Federal Reserve made the following decisions:
The Federal Reserve Board of Governors voted unanimously to lower the reserve balance interest rate to 3.65% starting December 11, 2025.
As part of the policy decision, the Federal Open Market Committee voted to direct the Federal Reserve Bank of New York Open Market Dealing Desk to execute transactions in the system's open market accounts in accordance with the following domestic policy directives until further notice:
“As of December 11, 2025, the Federal Open Market Committee instructs trading desks to:
In order to maintain the federal funds rate within the target range of 3.50% to 3.75%, open market operations are carried out as needed.
Start a standing overnight repurchase agreement operation at an interest rate of 3.75%.
A standing overnight reverse repurchase agreement operation is carried out at an operating interest rate of 3.50%, and a daily limit of 160 billion US dollars is set for each counterparty.
Increase the amount of securities held in the system's open market accounts by purchasing treasury notes and, if necessary, other US Treasury bonds with a maturity of no more than three years to maintain an adequate level of reserves.
The full principal repayment of US Treasury bonds held by the Federal Reserve will be reinvested in the auction. Transfer all principal payments on institutional securities held by the Federal Reserve to treasury bills.”
Among the relevant actions, the Federal Reserve Board of Governors voted unanimously to approve a reduction in the Tier 1 credit interest rate by 25 basis points to 3.75%, effective December 11, 2025. In taking this action, the Board approved requests submitted by the boards of the Federal Reserve Banks of New York, Philadelphia, St. Louis, and San Francisco to set this rate.
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