The Fed lowered the federal funds rate by 25 bps to 3.50%-3.75% at the Federal Open Market Committee (FOMC) meeting on December 10, 2025. This marked the third rate cut in 2025. The decision was taken amid indicators showing that economic activity continued to expand at a moderate pace, alongside slowing job gains and a rising unemployment rate through September 2025. With economic uncertainty remaining elevated, the Fed assessed that downside risks to the labor market had increased, making policy easing necessary to maintain balance within its dual mandate.