Business & Economics
Fed Cuts Rates to 3.5-3.75% Amid Biggest Internal Split Since 2019
On 11 Dec 2025 the FOMC trimmed its policy range by 25 bp for a third straight meeting but, in an unusually fractious 9-3 vote, signalled no further moves until fresh data arrive and pencilled in only one cut for 2026.
Focusing Facts
- Vote tally: 9 in favour, 3 against (Miran sought a 50 bp cut; Schmid and Goolsbee wanted no cut).
- New target range is 3.50-3.75%, the lowest since Feb 2023 and 75 bp below September’s level.
- Dot-plot: 6 of 19 officials project zero cuts in 2026, while 8 foresee at least two; median shows just one.
Context
This “hawkish cut” echoes the 1995 mid-cycle trio of 25-bp reductions that the Greenspan Fed used to insure against a softening labour market before pausing—yet the open dissent recalls the 1978-79 run-up to the Volcker shock, when inflation anxiety and political pressure collided. Structurally, the episode underscores two long-running currents: (1) the erosion of Fed consensus as presidential appointments tilt the Board, similar to the 1936–37 split that preceded the premature tightening which deepened the recession, and (2) the growing mismatch between monetary levers and a fiscal stance running 7-8 %-of-GDP deficits—an imbalance critics like ArmstrongEconomics highlight, though mainstream outlets downplay. Over a 100-year horizon, what matters is not this quarter-point tweak but whether the Fed can preserve perceived independence while managing the twin forces of ageing debt loads and AI-driven productivity swings; if the institution becomes a routine target of partisan bargaining, the legacy of the 1951 Accord may unravel, reshaping global demand for dollar assets far more than any single basis-point move today.
Perspectives
Mainstream financial and market-focused outlets
e.g., Economic Times, bdnews24, The Telegraph — They frame the quarter-point cut as a cautious, even "hawkish," move that nevertheless underpins a broadly positive 2026 outlook of stronger growth, easing inflation and stable unemployment, signalling the Fed will now pause and stay data-dependent. By foregrounding upbeat Fed projections and market gains, these outlets cater to investor confidence and may underplay lingering inflation or labour-market risks highlighted only in passing in the same reports.
Libertarian / anti-Fed economic commentary blogs
ArmstrongEconomics — They argue the cut proves the Fed remains a politicised accessory to runaway fiscal deficits, insisting monetary tweaks are irrelevant because inflation is driven by unchecked government spending, not interest-rate levels. A long-standing ideological hostility to central banking colours the analysis, leading to sweeping claims that dismiss any role for monetary policy and portray Trump’s push for lower rates chiefly as borrower self-interest, without engaging competing evidence.
International general news outlets emphasising US political tension
e.g., Le Monde, Jamaica Gleaner — They spotlight the unusually split FOMC and President Trump’s demand for deeper cuts, warning that the coming appointment of a new chair could heighten policy discord and politicise future rate decisions. By focusing on the drama of internal dissent and Trump’s influence, these reports may magnify perceptions of institutional crisis to suit an overseas audience fascinated by US political conflict, sidelining technical economic details of the decision itself.