LiveUpdated Dec. 10, 2025, 4:02 p.m. ETThe Federal Reserve cut interest rates for a third time this year, but officials were divided over their next move. Jerome Powell, the central bank’s chair, said “we haven’t made any decision about January.”Federal Funds Target Rate PinnedUpdated Dec. 10, 2025, 3:40 p.m. ETThe Federal Reserve lowered interest rates by a quarter of a percentage point on Wednesday, a highly contentious decision that suggests a divided committee may be reluctant to lower borrowing costs much further, unless the labor market weakens sharply.The decision to cut for a third meeting in a row shifted interest rates to a new range of 3.5 percent to 3.75 percent. It marked the fourth straight vote that was not backed by all members of the 12-person Federal Open Market Committee, demonstrating how fractured the central bank has become as it balances risks of rising unemployment and sticky inflation.Here are key takeaways from the meeting:The decision to cut rates was very divisive. Several officials expressed opposition to the move, in favor of standing pat. Jerome H. Powell, the Fed chair, said the intense debate reflected what a challenging position the Fed is in: The labor market is weakening while inflation has moved further above from the central bank’s 2 percent target.Further interest rate cuts are by no means guaranteed. Mr. Powell said that after a trio of quarter-point cuts since September, the Fed’s policy settings were in the range of “neutral,” a level of interest rates that neither revs up growth nor slows it down. That left the Fed “well positioned to wait to see how the economy evolves,” he said.Fed officials are watching the labor market particularly closely. If there are signs that the unemployment rate might surge, that would probably prompt more officials to embrace the need to cut rates. So far, though, most policymakers do not appear worried, nor do they appear to be downbeat about growth. Projections released on Wednesday showed that most officials expected the unemployment rate to peak at 4.5 percent in 2025, before declining.The Fed chair sounded relatively sanguine about the outlook for inflation, even as he acknowledged the clear impact that President Trump’s tariffs were having on consumer prices. He said the peak impact of tariffs should hit in the first quarter of next year, although that assumed no new levies in the meantime.The central bank is going to buy $40 billion of Treasury bills a month to ensure that there is enough cash in the financial system. The announcement came on the heels of the central bank’s decision earlier this month to stop shrinking the size of its balance sheet.Dec. 10, 2025, 4:02 p.m. ETAsked if he had requested Fed chair nominees to pledge that they would lower rates, Mr. Trump said he had not, but added: “I’ll be asking questions, and I’ll be able to figure it out.”Dec. 10, 2025, 4:02 p.m. ETThe S&P 500 faded from a record high in the final minutes of trading on Wednesday, in what remained a bullish signal from the market after the Federal Reserve cut interest rates by a quarter of a percentage point and Powell stressed the importance of protecting against further weakness in the economy, which could mean more interest rate cuts to come.Dec. 10, 2025, 3:59 p.m. ETTrump confirmed he’s meeting with Kevin Warsh as a potential next Fed chair today. “Our rates should be the lowest rates in the world,” he said.Dec. 10, 2025, 3:38 p.m. ETShortly after Powell concluded his news conference, Trump expressed dismay that the Fed did not announce a deeper cut to interest rates. He reprised his attacks on Powell as he decried the fact that the central bank had only cut rates by a “rather small number that could have been doubled, at least doubled.”“You can have tremendous growth without inflation,” Trump later said. “Everything goes up with the growth. But that’s not inflation. So I think we can do much better than traditional numbers.”Dec. 10, 2025, 3:27 p.m. ETThe S&P 500 ended the news conference 0.8 percent higher and trading at a record high. Expectations for further interest rate cuts have ticked up from yesterday but only marginally. The two-year Treasury yield, which is sensitive to changes in interest rate expectations, fell a little less than 0.1 percentage points.Dec. 10, 2025, 3:22 p.m. ETPowell’s news conference just wrapped up. Stay tuned for takeaways.Dec. 10, 2025, 3:22 p.m. ETPowell declines to say whether he will stay on as a governor after his term ends in May. His term as governor runs through Jan. 31, 2028.Dec. 10, 2025, 3:20 p.m. ETPowell has gotten at least three questions about artificial intelligence in this news conference. He’s avoided taking any definitive position on how it is affecting productivity or the labor market, but it’s striking to me that he’s getting so many questions about it.Dec. 10, 2025, 3:20 p.m. ETAsked about his legacy, Powell says he wants to turn over a strong economy to his successor whoever that may be.Dec. 10, 2025, 3:20 p.m. ETPressed on the productivity implications of A.I., Powell said it’s likely to be having some impact, but it’s unclear how much. “If you use it in your personal life, you can see the prospects for productivity,” he said. “It may make other people have to find other jobs though.”Dec. 10, 2025, 3:17 p.m. ETPowell notes that there’s not a lot the Fed can do about housing affordability, which is more about the supply of homes. “I don’t know that a 25 basis point decline in the federal funds rate is going to make much of a difference for people,” he said. “We don’t really have the tools to affect a secular housing shortage.”Dec. 10, 2025, 3:15 p.m. ETPowell says high-income households are helping to prop up consumer spending. But he says that tamping down inflation and maintaining a strong labor market are the best ways to help households up and down the income spectrum.Dec. 10, 2025, 3:11 p.m. ETClearly, the dropoff in immigration is a large reason why job growth has sunk to very low levels — the economy doesn’t need to generate so many jobs in order to soak up the people still entering the labor force. But Powell notes that losing jobs still wouldn’t be a good sign. “A world where job creation is negative, I think we need to watch that situation really carefully, and make sure we’re not pushing down on job creation” with monetary policy, he said.Dec. 10, 2025, 3:11 p.m. ETPowell says the official figures from the Bureau of Labor Statistics are probably overstating job growth right now, and that revised numbers could ultimately show that employment is falling. That’s a fairly widely held view among economists, for technical reasons to do with the way the government payroll numbers are calculated. But it’s still notable that the Fed is effectively applying a discount to the official numbers.Dec. 10, 2025, 3:09 p.m. ET“If you get away from tariffs, inflation is in the low twos,” Powell says. His point is that the uptick in inflation is a result of Trump’s policies. “It’s really tariffs.”Dec. 10, 2025, 3:07 p.m. ETPowell’s point on affordability is an important one. Affordability isn’t just about prices; it’s also about incomes. And for most people, their income is tied to their job — meaning that allowing the labor market to deteriorate would only make the affordability crisis worse.Dec. 10, 2025, 3:05 p.m. ETPowell hits the “affordability” buzzword, noting that workers will need a few years of real wage gains — that is, their incomes growing faster than inflation — to start to feel better about their economic situations.Dec. 10, 2025, 3:03 p.m. ETPowell says that if no new tariffs are announced, the peak impact on inflation should probably hit around the first quarter of next year, though he says the timing is uncertain. And he says the additional impact on inflation should be relatively modest from here.Dec. 10, 2025, 3:04 p.m. ETPowell’s comment on the timing there is also interesting because the fate of those tariffs is quite uncertain, with the Supreme Court still reviewing the legality of many of Trump’s duties.Dec. 10, 2025, 3:03 p.m. ETPowell gives a succinct “no,” when asked if the president’s search for a new chair was making his job more difficult.Dec. 10, 2025, 3:02 p.m. ETPowell is asked about his previous comments that the Fed should consider slowing down when it does not have a complete picture of how the economy is faring because of the government shutdown. He instead pointed to various evidence that the labor market is continuing to cool off and that inflation has been more muted than expectedDec. 10, 2025, 3:02 p.m. ET“It doesn’t feel like a hot economy” that would lead to faster inflation, he says.Dec. 10, 2025, 2:54 p.m. ETPowell notes that monetary policy has been working — but tariffs have gotten in the way. “We have made progress this year in non-tariff related inflation,” he said, noting that tariffs are likely to keep pushing inflation up next year.Dec. 10, 2025, 3:02 p.m. ETThe evidence of tariff-related impact seems pretty undeniable, Powell goes on. “That goods inflation is only in sectors where there are tariffs.”Dec. 10, 2025, 2:52 p.m. ETA reporter noted that in the 1990s, two previous sequences of three rate cuts in a row were then followed quickly by rate hikes. Powell threw cold water on a repeat. “I don’t think that a rate hike is anybody’s base case,” he said.