TLDR
The FOMC cut the federal funds rate by 25 basis points to 3.50%3.75% on Wednesday, its third reduction this year, with a split vote and cautious guidance about what comes next. Details here.
- Third 25 bp cut of 2025, bringing rates to a three?year low. Report.
- Vote was split with three dissents on both sides of the decision. Coverage.
- The dot plot signals only one cut in 2026 and a likely pause near term. Summary.
Deep Dive
1. The Move
The Fed lowered the policy rate by 0.25 percentage points to 3.50%3.75% and paired it with cautious language often described as a hawkish cut. The statement revived wording about assessing the extent and timing of future adjustments, signaling data dependency and a high bar for more easing. Recap.
Policy is easing, but the Fed is not committing to a cutting cycle; each step will hinge on incoming labor and inflation data.
2. The Split Vote
Three officials dissented in opposite directions, a rare sign of internal division. Chicagos Austan Goolsbee and Kansas Citys Jeff Schmid preferred no change, while Governor Stephen Miran argued for a 50 bp cut. Names and split.
The committee is balancing a softer labor market against still?elevated inflation risks, which can increase path uncertainty and headline sensitivity.
3. The Outlook
The Feds projections suggest only one rate cut in 2026 and language that it may now pause to observe effects. Markets and media characterized the move as protective against hiring weakness rather than a pivot to aggressive easing. Outlook note.
For risk assets including crypto, a slower easing path reduces tailwinds from rates; catalysts will likely shift back to growth, liquidity, and sector?specific news.
Conclusion
The Fed delivered a quarter?point cut but kept a cautious tone, highlighting a data?dependent track with limited additional easing in the near term. For markets, that means some relief on rates, but direction likely hinges on upcoming labor and inflation prints rather than a pre?set cutting cycle.
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