Federal Reserve Cuts Interest Rates; Federal Funds Range Now 3.50–3.75%

Washington D.C. : The Federal Open Market Committee (FOMC) and the Board of Governors of the Federal Reserve System approved a 25-basis-point decrease in key interest rates to support economic stability:

• Federal funds rate target range: lowered to 3.50% – 3.75% (effective December 11, 2025).

• Interest on reserve balances: reduced from 3.90% to 3.65%.

• Primary credit rate (discount window): reduced from 4% to 3.75% for the Federal Reserve Banks of New York, Philadelphia, St. Louis, and San Francisco. Other Reserve Banks aligned to 3.75% shortly after.

• Secondary and seasonal credit rates: formulas renewed; secondary rate set 50 basis points above primary, seasonal rate recalculated biweekly based on federal funds rate and 3-month CD rates.

Board members noted stable economic activity, improved labor availability, wage pressures in skilled positions, cost increases for health insurance, and growing investment demand in AI and data centers. The policy aims to maintain support for economic growth amid sectoral and regional differences.

Voting: Chair Powell, Vice Chair Jefferson, Vice Chair for Supervision Bowman, Governors Waller, Cook, Barr, and Miran.