The Federal Reserve is widely expected to cut the federal funds rate by 25 bps to a range of 3.5%–3.75% in December 2025, following similar reductions in September and October. This would bring borrowing costs to their lowest level since 2022. The decision comes amid clear signs of a rapidly cooling labour market, even as policymakers continue to operate without several key government data releases that remain delayed or suspended due to the shutdown. Markets will also focus on the updated dot plot and officials’ interest-rate projections for 2026, which are likely to highlight ongoing divisions over the need for further easing in the face of persistent inflation. In September, the Fed projected just one rate cut in 2026. Traders currently expect roughly two additional quarter-point cuts next year, likely in June and September.