The Fed cut interest rates by 0.25%.

VTV.vn - The Fed has decided to lower interest rates for the third time this year, a move anticipated by the market to address risks in the labor market.

Fed cuts interest rates for third time in a row

On December 10th, the US Federal Reserve (Fed) decided to lower interest rates for the third time this year, a move anticipated by the market to address risks in the labor market. However, this decision reveals an unprecedentedly deep division within the Fed's policymakers.

At the conclusion of its two-day policy meeting, the Federal Open Market Committee (FOMC), the Fed's policymaking body, announced a 0.25 percentage point cut in the benchmark interest rate. This brought the US federal funds rate down to a range of 3.5% - 3.75%, the lowest level since November 2022.

This marks the Fed's third interest rate cut in four months, a move expected to create a more favorable lending environment and support the world's largest economy .

In its official statement, the FOMC said the decision was made amid "slowing job growth and a slight increase in the unemployment rate." The Fed is concerned about increasing risks to the labor market, even as inflation remains high.

While this move aligns with market expectations, the Fed signals that the path of monetary policy ahead is becoming more unpredictable. The agency left open the possibility of at least one more interest rate cut in 2026, while affirming that it will "carefully assess upcoming data" to make appropriate adjustments, aiming to bring inflation down to 2%.

This is the Fed's third interest rate cut in four months.

Notably, this decision reveals deep divisions within the FOMC. Of the 12 members with voting rights, three officials voted against, a rare disparity. The President of the Chicago Fed branch, Austan Goolsbee, and the President of the Kansas City Fed branch, Jeffrey Schmid, wanted to keep interest rates unchanged. Conversely, Fed Governor Stephen Miran supported a more aggressive interest rate cut of 0.5 percentage points.

At this meeting, Fed officials also raised their forecast for U.S. Gross Domestic Product (GDP) growth in 2026 to 2.3% from the previously projected 1.8%, but slightly lowered their inflation forecast.

The expected reduction in interest rates will have an immediate and positive impact on millions of Americans, making home and car loans more affordable for them. Economic experts predict this move will be a significant boost to the consumer market, especially as the US enters the year-end holiday shopping season.

Previously, in the New York Fed's November 2025 Consumer Expectations Survey, American households expressed concerns about their current and future financial situation in November 2025, even as inflation forecasts remained stable.

However, regarding the labor market, Americans are showing more optimism. According to the report, forecasts for a higher unemployment rate in 2026 have been lowered, and predictions of job losses have fallen to their lowest level since December 2024.

Meanwhile, according to a report released on December 5th by the US Department of Commerce, consumer spending in September 2025 increased by only 0.3%. This figure is lower than the adjusted increase of 0.5% in August 2025 and is in line with economists' forecasts. However, when adjusted for inflation, the actual spending of consumers remained completely unchanged compared to the previous month.

The primary reason for this slowdown is the rise in commodity prices. The Personal Consumption Expenditures (PCE) price index – the Fed’s preferred measure of inflation – rose 2.8% in the 12 months to September. This is the largest year-on-year increase since April 2024. Notably, gasoline and energy product prices surged 3.6%, while overall commodity prices rose 0.5% due to the higher costs of furniture, home appliances, clothing, and footwear.

Chief economist Kathy Bostjancic at financial services firm Nationwide argues that many consumers, particularly middle- and low-income households, are facing widespread affordability issues. Financial pressures are forcing them to be more cautious and become shoppers who focus more on the intrinsic value of products.

This meeting was also the Fed's final meeting of 2025 before entering 2026, a year predicted to bring significant changes as Fed Chairman Jerome Powell's term ends in May 2026 and pressure mounts on the new "captain" of the US central bank.

Source: https://vtv.vn/fed-giam-lai-suat-025-100251211100330547.htm