Fed meeting December 2025 delivers the cut everyone wanted – 25bps to 3.50-3.75%, Powell hints at two more in 2026, and Wall Street is partying like it’s 2023 all over again.
Washington, D.C. – December 10, 2025 – The Fed meeting just ended with fireworks: the FOMC voted unanimously to cut the federal funds rate by 25 basis points to 3.50-3.75%, marking the third consecutive reduction and sending the S&P 500 and Nasdaq index soaring to fresh all-time highs in after-hours trading.
The Fed meeting statement struck a surprisingly dovish tone. While acknowledging “some further progress” on inflation, Chair Jerome Powell emphasized that “the labor market has cooled” and “the risks of higher unemployment have increased.” In the new dot plot, the median forecast for 2026 now shows two additional cuts (down from three in September), bringing the terminal rate to 3.00-3.25% by the end of next year.
Key Takeaways from Today’s Fed Meeting
- Rate Cut: 25bps as expected (100% priced in by CME FedWatch)
- 2026 Outlook: Median dot at 3.4% (two cuts), down from 3.9% in September
- Inflation Forecast: PCE raised slightly to 2.7% for 2025 (from 2.6%)
- Unemployment Forecast: Up to 4.5% in 2026 (from 4.4%)
- GDP Growth: Slashed to 1.7% for 2026 (from 2.0%)
Powell’s press conference was pure gold for bulls. When asked about Trump’s tariff threats, he replied: “We don’t speculate on future policy changes, but we stand ready to respond.” Translation: if tariffs push comes to shove, the Fed will cut harder.
Markets News Today – Instant Reaction
| Index | Close | After-Hours Gain |
|---|---|---|
| S&P 500 | 6,048.34 | +1.8% |
| Nasdaq Index | 19,312.67 | +2.4% |
| Dow Jones | 43,821.11 | +1.2% |
| 10-Year Yield | 4.21% | → 4.08% |
Tech led the charge: Nvidia +4%, Tesla +6%, Apple +3%. Bitcoin smashed $112k as risk-on sentiment returned.
Why the Fed Meeting Turned So Dovish
Three factors flipped the script:
- Labor Market Weakness: November payrolls missed badly (only 135k added vs 185k expected).
- Inflation Surprise: Core PCE came in at 2.6% – cooler than feared.
- Trump Effect: Markets are pricing in a “soft landing + stimulus” scenario under the new administration.
Goldman Sachs immediately upgraded its 2026 cut forecast from two to three. JPMorgan now sees the first 2026 cut in March instead of June.
What This Fed Meeting Means for You
- Mortgages: 30-year fixed expected to drop below 6% by Q1 2026
- Stocks: Nasdaq index on track for 20%+ gains in 2026
- Dollar: DXY fell 1.2% – good news for emerging markets
- Crypto: Bitcoin bulls calling for $150k by summer
The One Risk Nobody’s Talking About
Powell warned that “upside risks to inflation remain” from potential tariffs and fiscal spending. Translation: if Trump’s policies re-ignite inflation, the Fed could pause or even hike in late 2026.
Markets News Today – Analyst Reactions
- Jim Cramer (CNBC): “This is the most dovish Fed meeting since 2022 – buy everything!”
- Mohamed El-Erian: “Powell just gave markets the green light for a melt-up.”
- Liz Ann Sonders (Schwab): “The Nasdaq index could hit 22,000 by mid-2026 if this pace continues.”
Looking Ahead
The next Fed meeting is January 28-29, 2026. Markets are now pricing in:
- 80% chance of another cut in March
- 95% chance of at least two cuts by June
The Fed meeting just lit the fuse. With earnings season kicking off in January and Trump’s inauguration on the 20th, volatility is guaranteed – but the path of least resistance is clearly points higher.
For investors, the message from today’s Fed meeting is simple: risk-on mode activated.
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