The Federal Reserve has cut interest rates by 25 basis points as expected. The dot plot indicates only one rate cut next year, which may depend on future labor market data.

On December 11, the Federal Reserve announced a 25 basis point rate cut at 3 a.m. Beijing time as scheduled, lowering the benchmark interest rate to 3.50%-3.75%. This marks the third consecutive meeting to cut rates, in line with market expectations, with a total of 75 basis points cut this year. The Fed’s dot plot forecast indicates a 25 basis point rate cut in both 2026 and 2027. Nick Timiraos, the “Fed whisperer,” in his latest article, stated that Fed officials have cut rates for the third consecutive meeting, but concerns over inflation and the job market remain the primary worries. There are unusual disagreements within the Fed, and officials have subtly indicated they are not eager to continue rate cuts. Additionally, Fed Chair Jerome Powell mentioned in his speech that the labor market appears to be gradually cooling, and inflation remains somewhat elevated. Inflation risks are tilted to the upside. September labor market data showed a slight increase in the unemployment rate and a significant slowdown in employment growth. Labor demand has noticeably weakened, vitality has diminished, and the market is somewhat softening. Goldman Sachs analyst Kay Haigh stated that the Fed has reached the “preventive rate cut” endpoint. She believes, “The responsibility now lies with the labor market data to further weaken to justify additional easing policies in the near term.” After Powell’s speech, Bitcoin briefly surged past $94,000 but then continued to decline, with the current price at $91,918 at the time of reporting.