FOMC Dropped 0.25% "Savage Cut" in Epic 9-3 Vote

The Fed went ahead and gave us that 25bp rate cut everyone was vibing for, sliding from 4.00% to 3.75%. 🔥 But just a heads-up: the squad said chill on expecting more cuts anytime soon.

The decision came after a real spicy 9-3 vote. We had two hawks saying "nah fam", no more cuts, while our bro Miran was out here rooting for a bigger wok: a 50bp cut! First time the squad's been split like this since 2019, no cap. 😲

Key Takeaways

• Rate Cut Delivered: The crew at FOMC shaved down the federal funds rate by 25 basis points to a range of 3.50-3.75%. That's the third chop in a row since September. 🚀
• Hawkish Pivot in Projections: The latest "dot plot" shows squad isn't planning as many cuts as before — just two in 2025 instead of the previous four. Whoa, hold your horses. 🐎
• Inflation Concerns Elevated: They said inflation is still on its glow-up from earlier this year, sticking around at 2.9% for 2025 before cooling off in 2026. Stay vibing but eyes on that #Bag. 💵
• Labor Market Reassessment: Job vibes got slower, but we ain’t crashing yet. They mentioned the risks are higher but we still cruising just a tad slower. 🤞
• Dissent Signals Division: Three members had beef with the decision. Miran wanted a bigger cut, Goolsbee and Schmid said nah, highlighting the squad's internal tea. ☕
• Balance Sheet Adjustments: Fed's gonna start scooping up those shorter Treasury securities to keep reserves in check. Normalizing is the new cool. 🌟

The official word pointed out that economic vibes are just chillin' moderately, but job gains are slowing while inflation's somewhat high-key elevated. It's a tightrope walk for the fed fam. 🎪

The three no-go votes highlighted these uncertain vibes. Miran's need for a bigger cut is all about job fears, while Goolsbee and Schmid are fretting over that inflation heat. 🔥

Link to FOMC Monetary Policy Statement (December 2025)

Meanwhile, the updated projections showed the Fed's going full hawk mode. They’re dropping some new numbers: GDP is now lit at 2.3% for 2026, while unemployment should peak at 4.5% and dip slowly. 📉

Inflation's not backing down soon. Core PCE inflation chillin' at 3.0% for 2025, then chilling to 2.5% in 2026. It's like inflation slaying the runway above that 2% target for a hot minute. 🔥

Link to FOMC Summary of Economic Projections (December 2025)

The dot plot’s telling us the median federal funds rate for end-2025 hopped up a bit to 3.6%. Two cuts expected instead of four. Keeping it slow and steady now. 🐢

For 2026 and 2027, median rates stay chill at 3.4% and 3.1%, signaling a mindful stroll towards that 3.0% long-term target. 🌈

In the press chat, Boss Powell said it’s about time to hit the brakes on rate cuts. Decisions gonna be data-driven, so no fast tracks here. 🤓 Relax, we adapting as we go without a fixed plan.

Powell reiterated that things are not as tight anymore, which means the squad can roll with the punches and take their sweet time with further tweaks. 🕴️

Link to Fed Chairperson Powell’s Press Conference (December 2025)

On the work front, Powell thinks things are still solid, not crumbling. Unemployment’s lowkey high but nothing catastrophic. Seems like there's more workers on deck, not a job-losing crisis. 💪

Market Reactions

U.S. Dollar vs. Major Currencies: 5-min

The USD was hanging around pre-FOMC, but took a dip once the rate cut news hit. Everyone started feeling brave and took a risk, pushing the greenback down a bit further. 📉

After catching a vibe from Powell's press talk, the dollar had a lil’ rally but it didn't last too long. It went on another selloff spree about an hour later, just vibing with those trading waves like a true baddie. 🌊

Eventually, it stopped dropping and caught a breather, kinda leveled before another round of selling kicked in the next session. This currency be doing the cha-cha slide. 💃🕺