US Fed cuts policy rate by 25 bps to 3.5-3.75% as job risks rise

11 Dec '25

1 min read

US Fed cuts policy rate by 25 bps to 3.5-3.75% as job risks rise

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US Federal Reserve cut the federal funds rate by 25 basis points to 3.5–3.75 per cent, citing increased risks to employment despite moderate economic growth.
Job gains have slowed and unemployment has inched up, while inflation remains elevated.
The Fed said future moves will depend on incoming data and reaffirmed its two per cent inflation goal.

US Federal Reserve has lowered the target range for the federal funds rate by one-quarter point to 3.5 to 3.75 per cent, citing a shift in the balance of risks and rising concerns over employment. The decision follows signs that the US economy continues to expand at a moderate pace, though job gains have slowed and the unemployment rate has edged higher through September.

Recent data has reinforced these trends, while inflation has risen from earlier in the year and remains moderately elevated. Policymakers noted that uncertainty around the economic outlook is still high, and downside risks to employment have increased in recent months, the Federal Open Market Committee said in a statement.

The Committee reaffirmed its long-term objectives of maximum employment and two per cent inflation, saying future rate moves will depend on incoming data, the evolving outlook and the overall risk environment. Officials emphasised strong commitment to restoring price stability while supporting labour market conditions.

The Fed also confirmed that reserve balances have fallen to ample levels and said it will begin purchasing shorter-term Treasury securities as needed to maintain sufficient reserves in the financial system.

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