Source: Federal Reserve; Compiled by: Jinse Finance
Current indicators show that economic activity is expanding at a moderate pace. Job growth has slowed somewhat this year, and the unemployment rate rose slightly in September. Recent indicators also confirm this trend. Inflation has risen since the beginning of the year and remains at a relatively high level.
The FOMC's objective is to achieve maximum employment and a 2 percent inflation rate in the long run. Uncertainty about the economic outlook remains high. The FOMC closely monitors the risks to its dual mandate and considers that downside risks to employment have increased in recent months.
To support its objectives and in light of changes in the balance of risks, the FOMC decided to lower the target range for the federal funds rate by 0.25 percentage points to 3.5% to 3.75%.
In considering the magnitude and timing of further adjustments to the target range for the federal funds rate, the Committee will carefully assess the latest data, the evolving economic outlook, and the balance of risks. The Committee remains firmly committed to supporting full employment and restoring inflation to its 2 percent target. In assessing the appropriate stance of monetary policy, the FOMC will continue to closely monitor the implications of emerging information for the economic outlook. The FOMC stands ready to adjust its stance of monetary policy as appropriate should risks arise that could hinder the achievement of its objectives. The FOMC's assessment will take into account a wide range of information, including labor market conditions, inflation pressures and inflation expectations, as well as financial and international developments. The FOMC considers reserves to have fallen to an adequate level and will begin purchasing short-term Treasury securities as needed to maintain an adequate supply of reserves. Those who voted in favor of the monetary policy action were: Chairman Jerome H. Powell; Vice Chairs John C. Williams; Michael S. Barr; Michelle W. Bowman; Susan M. Collins; Lisa D. Cook; Philip N. Jefferson; Alberto G. Mussaleem; and Christopher J. Waller. Those who voted against the action were: Stephen I. Milan, who favored lowering the target range for the federal funds rate by 0.5 percentage points at this meeting; and Austan D. Goolsby and Jeffrey R. Schmid, who favored keeping the target range for the federal funds rate unchanged at this meeting.In order to implement the monetary policy statement issued by the Federal Open Market Committee on December 10, 2025, the Federal Reserve has made the following decision:
The Board of Governors of the Federal Reserve System unanimously voted to lower the interest rate on outstanding reserves to 3.65%, effective December 11, 2025.
As part of its policy decision, the Federal Open Market Committee (FOMC) voted to instruct the New York Federal Reserve Bank's open market trading desk to execute transactions in its system open market accounts in accordance with the following domestic policy directive, pending further instructions: "Effective December 11, 2025, the FOMC instructs the trading desk to: Conduct open market operations as necessary to maintain the federal funds rate within a target range of 3.5% to 3.75%. Conduct Standing overnight repurchase agreement operations at a rate of 3.75%. Conduct transactions at an issuance rate of 3.5%." 192);">Standing overnight reverse repurchase agreement operations, with a daily single transaction limit of $160 billion.Increasing the holdings of securities in the System Open Market Account to maintain adequate reserve levels by purchasing Treasury securities, and, if necessary, other Treasury securities with a remaining maturity of 3 years or less.
All Treasury securities held by the Federal Reserve will be repaid through auction. All agency securities held by the Federal Reserve will be reinvested in short-term Treasury securities.
In related actions, the Federal Reserve Board of Governors unanimously voted to lower the benchmark lending rate by 0.25 percentage points to 3.75%, effective December 11, 2025. In taking this action, the Board approved the requests submitted by the boards of directors of the Federal Reserve Banks of New York, Philadelphia, St. Louis, and San Francisco to set this rate.
The trading desk plans to allocate monthly secondary market purchases to the two Treasury sectors. The purchase amount for each sector will be determined based on sector weights. These sector weights will be based on the 12-month average of the outstanding face value of each sector as a percentage of the total outstanding Treasury securities of the two sectors as of the end of September 2025.
According to the FOMC's implementation notes issued on December 10, 2025, the Federal Reserve Bank of New York Open Market Trading Desk (the Trading Desk) will make the following adjustments to its Standing Overnight Repurchase Agreements (repurchase agreements) operations, effective December 11, 2025.
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