Federal Reserve Chair Powell Speaks On Interest Rate Cut Decision

On December 10, the U.S. Federal Reserve concluded its two‑day monetary policy meeting and announced a reduction of the federal funds rate target range by 25 basis points, setting it between 3.5% and 3.75%.

That same day, Federal Reserve Chair Jerome Powell delivered remarks on the committee’s decision. Powell emphasized that the Fed’s monetary policy is guided by its dual mandate of promoting maximum employment and maintaining price stability. At the meeting, the committee opted for a 25‑basis‑point cut, noting that inflation risks remain tilted upward while employment risks lean downward, creating a challenging environment. With this move, the committee has lowered policy rates by a cumulative 0.75 percentage points over the past three meetings. Powell stated that the decision will help stabilize the labor market and, as tariff effects diminish, guide inflation back toward the 2% target.

Powell explained that since September, adjustments to the committee’s stance have placed policy within a neutral expectation range, enabling more precise decisions on the scale and timing of future rate changes based on incoming data, evolving economic conditions, and risk assessments.

He noted that in the Federal Open Market Committee’s Summary of Economic Projections, participants evaluated the appropriate path of the federal funds rate under their most likely economic scenarios. The median forecast places the rate at 3.4% by the end of 2026 and 3.1% by the end of 2027, unchanged from September’s projections. Powell stressed that these forecasts are uncertain and do not represent predetermined plans or decisions. Monetary policy is not on a preset course, and each decision will be made according to the circumstances of individual meetings. According to the SEP, the median forecast for personal consumption expenditures inflation is 2.9% for this year and 2.4% for next year.

Powell added that fiscal policy will remain supportive, with continued investment in artificial intelligence and steady consumer spending. He noted that the baseline expectation for economic growth next year should be solid.

He further explained that the current inflation rate exceeding the Fed’s 2% target is primarily the result of higher import tariffs imposed by the Trump administration. Powell reiterated that the impact of tariffs on inflation is likely to be a “one‑time price increase.”