In the United States, the American Federal Reserve (Fed) lowered its key rates by 25 basis points for the third consecutive time, placing them between 4.25% and 4.50%. This decision, expected by the markets, sparked dissension within the Monetary Policy Committee (FOMC) and questions among analysts.
FOMC member Beth Hammack voted against this new cut, while some analysts criticize the decision, pointing to a recent rise in inflation. Although growth has slowed over the past two years, the PCE index remains at 2.5% for 2025, according to Fed forecasts, and a return to the 2% target is only expected in 2026. Despite these challenges, Jerome Powell, Chairman of the Fed, indicated that the institution was moving closer to its “neutral rate”. The Fed now plans two additional cuts in 2025.
Economic reactions and forecasts
The financial markets poorly received these announcements, leading to a sharp drop in stock indices: the Dow Jones lost 2.58%, the Nasdaq 3.56%, and the S&P 500 2.95%. Furthermore, the Fed revised its growth forecast for 2025 upwards to 2.1% and maintains a low unemployment rate of around 4.3%, despite persistent inflation.
But the economic outlook remains unclear, in particular because of the policies considered by Donald Trump, who will return to office in January. Between promises of deregulation, increases in customs duties, tax cuts, and migration restrictions, the potential impacts on supply and demand remain difficult to anticipate.
