The Federal Reserve cut short-term interest rates for a third time in 2025. What's next for borrowers and consumers?

If the Fed holds interest rates steady as a means of protecting against inflation, it risks a deeper slowdown of the labor market. On the other hand, by lowering rates to stimulate hiring, the Fed threatens to boost spending and worsen inflation.

Thanks to its latest decision on Wednesday – its final one for 2025 – the Federal Reserve has now reduced its key overnight lending rate by 1.75 percentage points since it began its rate-cutting cycle in September 2024.

The December Federal Reserve meeting may lead to lower mortgage rates, but it's not directly caused by the 25 basis point rate cut.

Federal Reserve cuts its benchmark interest rate by 0.25 percentage points, bringing the federal-funds rate to 3.50 %–3.75 % — the lowest in nearly three y

The reduction lowers the federal funds rate — what banks charge each other for short-term loans — to between 3.5% and 3.75%, down from its prior range of 3.75% to 4%. The Fed's decision marks the third consecutive rate cut since September, lowering the federal funds rate by a total of 0.75 percentage points this year.

Mortgage rates moved higher after the Fed cut interest rates last week. That caused demand to drop for both home buying and refinancing.

In addition, deportations may be impacting the numbers and leading to lower job growth, but in a way that might present lower economic risk. That said, unemployment continues to move up, now to 4.6% and even though the increase has been gradual up to November’s report, rising unemployment has historically elevated recession risk.

The Fed said Wednesday afternoon it is trimming its benchmark lending rate by a quarter point, its third such reduction this year. Follow along as Chair Jerome Powell discusses the move.

Fed rate cuts have made HELOC borrowing costs more affordable. Here's how much a $40,000 HELOC can cost monthly now.

The Fed lowered its benchmark interest rate by a quarter percentage point, in an effort to shore up a weakening job market. With inflation remaining stubbornly high, it was not a slam dunk decision.

New research from the Federal Reserve Bank of Dallas is building the case for a change in the interest rate the central bank targets to achieve its monetary policy goals. In a paper released Tuesday,