The Federal Reserve cut short-term interest rates for a third time in 2025. What's next for borrowers and consumers?

Thanks to its latest decision on Wednesday – its final one for 2025 – the Federal Reserve has now reduced its key overnight lending rate by 1.75 percentage points since it began its rate-cutting cycle in September 2024.

The December Federal Reserve meeting may lead to lower mortgage rates, but it's not directly caused by the 25 basis point rate cut.

If the Fed holds interest rates steady as a means of protecting against inflation, it risks a deeper slowdown of the labor market. On the other hand, by lowering rates to stimulate hiring, the Fed threatens to boost spending and worsen inflation.

Federal Reserve officials are remarkably divided about the inflation outlook and consequently whether interest rates should be cut further. On Tuesday, Fed governor Christopher Waller said that he was

Federal Reserve cuts its benchmark interest rate by 0.25 percentage points, bringing the federal-funds rate to 3.50 %–3.75 % — the lowest in nearly three y

Mortgage rates moved higher after the Fed cut interest rates last week. That caused demand to drop for both home buying and refinancing.

The Fed lowered its benchmark interest rate by a quarter percentage point, in an effort to shore up a weakening job market. With inflation remaining stubbornly high, it was not a slam dunk decision.

The FOMC cut interest rates as expected on Dec. 10, but mortgage rates are unlikely to fall further as a result.

New research from the Federal Reserve Bank of Dallas is building the case for a change in the interest rate the central bank targets to achieve its monetary policy goals. In a paper released Tuesday,