The Federal Reserve will announce its December interest rate decision at 2 p.m. ET Wednesday. Business Insider will be covering developments live throughout the day, including economists' insights, market moves, and what either a Fed rate cut or hold means for your wallet.
Check back here for updates — and tune into our live Q&A with reporters this afternoon at 4 p.m. ET.
At the macro level, more Fed cuts would be good news for jobs. If companies can borrow money more cheaply, it would free up funds to hire and pay employees, which would speed up labor market churn and encourage more consumer spending.
Job growth has substantially slowed in recent months, and the Fed's cuts at its last two meetings aimed in part to stem that decline.
Soft economic indicators show shaky consumer and business sentiment
Amazon CEO Andy JassyThos Robinson/Getty Images for The New York Times
Without the most timely jobs and price data, the Fed may have to lean more on soft economic indicators. Consumer sentiment is making a recovery following midyear dips, but remains low.
On recent earnings calls, leaders at major companies like Amazon, Walmart, and more have said they are feeling the heat of tariffs and hoping to streamline their workforces. Many major employers have announced layoffs and cost cutting in 2025, with some carving out their middle management tier.
Markets expect rate cuts, but bond yields are doing something strange
National Economic Council Director Kevin Hassett is one of the frontrunners to replace Fed Chair Jerome Powell next year.Anna Moneymaker/Getty Images
Investors anticipate a rate cut on Wednesday, with more to follow in 2026, but longer-term bond yields have been steadily rising. The 10-year Treasury yield is up 20 basis points from its November low, hovering around 4.20% on Wednesday.
Sources say the bond market is telegraphing a growing anxiety about the path of inflation in 2026. Trump ally Kevin Hassett, who recently shot to the top of the list of most likely next Fed chiefs, could lower rates aggressively if he takes over from Jerome Powell next year.
The calculus being made in the bond market seems to be that Hassett could lower rates too far, too fast, aggravating inflation and prompting a hawkish response from the Fed down the road.
Powell has been the Fed chair since 2018 and his term ends in May 2026. Trump is set to announce his successor early next year — a decision that will steer future monetary policy.
Frontrunners to lead the central bank include Trump's economic advisor Kevin Hassett, Fed Governor Christopher Waller, Fed Governor Michelle Bowman, former Fed Governor Kevin Warsh, and Chief Investment Officer of global fixed income at BlackRock Rick Rieder.
FOMC member Stephen MiranAlexi J. Rosenfeld/Getty Images
Fed leaders have shown uncharacteristic division in their decision-making this year. Minutes from recent meetings show that some Federal Open Market Committee members would prefer larger and more consistent interest rate cuts.
President Donald Trump has also been a vocal advocate for lower rates, at times threatening to fire Powell before the end of the chair's term. Trump appointee and Fed newcomer Stephen Miran joined the committee in August and has consistently pushed for more aggressive rate reductions.
The stock market opened nearly flat ahead of the 2 p.m. ET rate move. The S&P 500 was hovering around 6,840, while the Dow was up slightly to 47,580.
The week has been mostly quiet as investors await the central bank's decision. Major indexes are hovering close to records after climbing back from a tech-led sell-off in November. Investors are eagerly awaiting more rate cuts to help fuel further gains in 2026 as stocks head into the fourth year of the bull market.
Unemployment has started ticking up, but remains pretty low
The most recently released unemployment rate was still low, a little over 4%, but has slowly crept up this year. Job seeker frustration is compounded by a decline in job openings over the last few years.
Some demographics are also experiencing job market challenges more than others. Twenty-something college graduates are increasingly stuck submitting applications into the void, and the unemployment rate for Black Americans is nearly twice that of the general population.
The most timely inflation data won't be released in time for today's meeting, but Powell and his colleagues can look back on recent trends. Inflation rates remained above the Fed's 2% goal throughout 2025. The consumer price index — a key measure of inflation — cooled during the first few months of the year but began to creep up again in May.
Business Insider also asked our readers in November how prices have changed. About 200 readers responded; many said that the cost of groceries, dining out, and coffee has increased.
While investors expect the Fed to cut rates by 25 basis points, officials will probably send out some hawkish signals to the market on Wednesday, Goldman Sachs said.
Fed officials will likely suggest that the bar is higher for rate cuts going into next year, David Mericle, Goldman's chief US economist, wrote in a client note on Sunday. There will also likely be a handful of central bankers who will give "soft dissents" on where they see monetary policy going forward in the dot plot, he added.
While investors expect the Fed to cut rates by 25 basis points, officials will probably send out some hawkish signals to the market on Wednesday, Goldman Sachs said.
Fed officials will likely suggest that the bar is higher for rate cuts going into next year, David Mericle, Goldman's chief US economist, wrote in a client note on Sunday. There will also likely be a handful of central bankers who will give "soft dissents" on where they see monetary policy going forward in the dot plot, he added.
The Fed is expected to pencil in just one more rate cut in 2026, followed by one rate cut in 2027, per Goldman's forecast.
Lower Fed rates typically result in lower mortgage rates for homebuyers.Marco Bello/REUTERS
If the current pattern of rate cuts continues, American consumers may soon feel relief. Thirty-year fixed mortgages, two-year auto loans, and credit card rates tend to fluctuate alongside the federal funds rate.
And, while inflation remains above the Fed's 2% goal, mortgage rates have largely cooled in recent months in anticipation of rate reductions. Lower rates could also make home equity lines and small business loans more affordable — though savers might see less return on their high-yield savings accounts.
Investors are already pricing in a 'sell the news event,' Morgan Stanley says
Investors seem to be pricing in a "sell the news" reaction to Wednesday's rate decision, strategists at Morgan Stanley wrote in a note on Monday.
The bank added, though, that it remains optimistic about the market's direction over the medium term. That's because the job market looks on track to show moderate weakness in the coming months, which should clear the path for Fed rate cuts in 2026. Stronger earnings should also help lift the market higher, the bank said.
Job openings have been limited in 2025.Spencer Platt/Getty Images
Powell has said the Fed's cautious strategy this year stems from uncertainty over President Donald Trump's fast-changing tariff policies and stubborn inflation rates. The job market, meanwhile, has had a rocky 2025.
Business Insider has heard from frustrated job seekers at all levels of the career ladder, particularly those feeling pushed out of white collar roles. This past summer, the number of Americans looking for work eclipsed the number of vacancies, though the unemployment rate itself is still relatively low.
Powell has said the Fed's cautious strategy this year stems from uncertainty over President Donald Trump's fast-changing tariff policies and stubborn inflation rates. The job market, meanwhile, has had a rocky 2025.
Business Insider has heard from frustrated job seekers at all levels of the career ladder, particularly those feeling pushed out of white collar roles. This past summer, the number of Americans looking for work eclipsed the number of vacancies, though the unemployment rate itself is still relatively low.
There is no risk-free path for policyJerome Powell
"There is no risk-free path for policy as we navigate this tension between our employment and inflation goals," Powell said in October, adding, "Ultimately, lower rates will support more demand, and that'll support hiring over time. And, of course, we also have to be careful about this."
The Fed's dual mandate is to keep America's prices stable and the labor market healthy. These two goals have been challenging to balance this year: higher interest rates can help curb inflation but risk cooling down an already chilly labor market.
The Fed is also missing key pieces of data due to the government shutdown. The Bureau of Labor Statistics canceled the October consumer price index and unemployment rate releases, and the November jobs report and inflation data won't be released in time for today's meeting. December's decision will be more difficult without this information.
US stock futures are virtually unmoved as of just before 6:20 a.m. ET. Futures for all three of the Dow Jones, the Nasdaq, and the S&P 500 have moved less than 0.1% lower so far in this morning's trading.
There's a little more movement in European stocks, though nothing too drastic. Britain's benchmark, the FTSE 100, is up 0.2% on the day to 9,660, while Germany's DAX is 0.5% lower.
US stock futures are virtually unmoved as of just before 6:20 a.m. ET. Futures for all three of the Dow Jones, the Nasdaq, and the S&P 500 have moved less than 0.1% lower so far in this morning's trading.
There's a little more movement in European stocks, though nothing too drastic. Britain's benchmark, the FTSE 100, is up 0.2% on the day to 9,660, while Germany's DAX is 0.5% lower.
Away from stocks, the US dollar index is around 0.4% lower. The gold price is 0.3% down at roughly $4,200 per ounce.
Fed leaders have kept monetary policy moderately restrictive in recent months, holding rates steady until September before introducing two quarter-point cuts.
Chair Jerome Powell said in the last meeting that a rate change in December is "not a foregone conclusion, far from it" and "policy is not on a preset course," though on Wednesday morning, CME FedWatch is showing a roughly 90% chance of another quarter-point reduction.
Fed leaders have kept monetary policy moderately restrictive in recent months, holding rates steady until September before introducing two quarter-point cuts.
Chair Jerome Powell said in the last meeting that a rate change in December is "not a foregone conclusion, far from it" and "policy is not on a preset course," though on Wednesday morning, CME FedWatch is showing a roughly 90% chance of another quarter-point reduction.
Investors and consumers are hopeful for more cuts. Americans could see more affordable mortgage, auto, and credit card rates in the new year, and businesses would be able to borrow money more easily — a move that could juice the sluggish job market.
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