Fed cuts interest rates by 0.25% as labor market risks rise
Updated 12/11/2025 8:58:00 AM
Arab Finance: The US Federal Reserve reduced the target range for the federal funds rate by a quarter of a percentage point to between 3.5% and 3.75%, marking its first rate cut after months of economic uncertainty and mounting concerns about employment.
The Fed said economic activity is still expanding at a moderate pace, though job growth has slowed this year and the unemployment rate has edged higher through September.
Inflation, which had eased in previous months, has begun rising again since early in the year and remains elevated.
The decision, the Federal Open Market Committee (FOMC) noted, comes amid a shifting balance of risks driven largely by recent signs of labor market softening.
The committee reaffirmed its goal of achieving maximum employment and returning inflation to 2% over the long term.
It added that future monetary policy moves will hinge on incoming economic data, the broader outlook, and evolving risks, while keeping the option open to adjust its stance if needed.
The Fed also said reserve balances have reached adequate levels and that it will begin purchasing short-term treasury bonds when necessary to ensure sufficient liquidity in the financial system.
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