Here are the five big takeaways from Wednesday’s Fed rate decision
Federal Reserve Chairman Jerome Powell speaks at a news conference following the Federal Open Markets Committee meeting at the Federal Reserve on December 10, 2025 in Washington, DC.
Chip Somodevilla | Getty Images
The Federal Reserve approved a highly anticipated quarter-point rate cut on Wednesday in a meeting full of intrigue and surprises. Here’s a look at the top five results:
- The hawk cut is real; sort of. Wall Street had been predicting that the Fed would issue a strong warning along with the rate cut, warning that the bar for additional easing was high. But markets didn’t seem to care: Stocks posted strong gains on the day while Treasury yields fell.
- While a 9-3 vote would give broad support for this move, the Federal Open Market Committee differs. Three dissidents is too many, the most since September 2019. And one of the “no” votes came from an unlikely source: Chicago Fed President Austan Goolsbee. While Governor Stephen Miran wanted a half-point cut, Goolsbee and Kansas City Fed President Jeffrey Schmid preferred to remain constant. Six of 19 participants at the meeting said they would not vote for the cut, giving voice to “soft opponents” who thought the easing had gone far enough.
- The points were kept. In short, the “dot plot” of individual officials’ views on interest rates changed little in the coming years; The median shows just one cut in 2026 and one more cut in 2027 before the federal funds rate settles around a neutral 3%. Markets largely went along with the committee’s word, but futures pricing later in the day pointed to a 38% chance of two rate cuts next year that can’t be ignored.
- Bond buying is back. Not actually bonds, but bonds that the Fed will start buying again on Friday. With overnight funding markets feeling the pressure, the central bank said it would buy $40 billion in short-term bonds as part of a monthly program aimed at stabilizing markets and keeping the federal funds rate within a quarter-point range. Buying levels will vary, but some market participants viewed the announcement as a disguised easing that is positive for risky assets.
- Chairman Jerome Powell and the committee were also mostly optimistic about growth. “We have a remarkable economy,” said Powell, who has only three meetings remaining as chairman. FOMC officials also raised their views, increasing the outlook for 2026 gross domestic product growth by half a point to 2.3%.
what do they say
“Given the lack of consensus in the committee today, the slow release of traditional economic data, and the arrival of a new Fed Governor in early 2026, we think the Fed will likely remain on hold for some time. Still, continued softness in some employment indicators could certainly bring another 25 basis point cut into the mix for January.” — Rick Rieder, head of fixed income at BlackRock It has been reported that a finalist will replace Powell
“The Fed’s guidance probably tells us less than usual about the interest rate outlook for two big reasons. First, they know less than usual about the current state of the economy because the shutdown delayed the release of economic statistics. Second, the Fed’s guidance does not take into account how its approach will change after Chairman Powell’s term ends in May. In 2026, the Fed looks less likely to cut rates further than implied in the December Dot Plot.” — Bill Adams, chief economist, Comerica Bank
“The Fed has raised its growth expectations next year, which, along with the increase in cash provided to American households through changing tax policy, will cast doubt on the direction of monetary policy. This dynamic in our forecast significantly raises the bar for any possible rate cut by the Fed at its next meeting in January.” — Joseph Brusuelas, chief economist, RSM
