Federal Reserve Sets Target Range of 3.50-3.75% for 2025 After Three Rate Cuts
The Federal Reserve has lowered the benchmark interest rate three times in 2025, setting the year-end target range at 3.50-3.75%. The slowdown in employment has been a key factor influencing the direction of monetary policy. On September 17, 2025, the Fed reduced the target range for the benchmark interest rate by 0.25 percentage points to 4.00-4.25%, followed by two additional cuts of 0.25 percentage points each on October 29 and December 10. Non-farm employment in the U.S. increased by 584,000 in 2025, with an average monthly increase of 49,000, significantly down from 168,000 in 2024. In August 2025, non-farm employment saw only a 22,000 increase, while the unemployment rate stood at 4.3%. The Fed emphasized the necessity of rate cuts, citing the slowdown in employment growth and increasing downside risks. The Personal Consumption Expenditures (PCE) price index rose by 2.9% year-on-year in December 2025, with core PCE increasing by 3.0%. While the Fed mentioned maximum employment and a 2% inflation target, it repeatedly pointed out the slowdown in employment and downside risks. The Fed's rate-cutting cycle remains a benchmark for monetary policy in 2026.
-- Price
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