#us-federal-reserve

#us-federal-reserve

In a tense and unusually divided meeting, the U.S. Federal Reserve decided to cut interest rates by 0.25 percentage points to a range of 3.5% to 3.75%. This is the third consecutive rate cut since September, as concerns about a deteriorating labor market outweigh fears of rising inflation. The final meeting of the year also yielded new economic forecasts and offered some clues about the Fed's roadmap for 2026.

Mid-cap and small-cap indexes outperformed, while the technology-heavy Nasdaq slipped as investors took profits from this year's strong run in artificial intelligence-related stocks. The Fed remains the central focus. Powell acknowledged that inflation remains a challenge but also highlighted weakening signs in the labor market. He noted that interest rates are currently at restrictive levels, and the balance of risks may be shifting toward employment. His comments raised expectations that the Fed could begin lowering rates soon.