The Fed cuts rates by 25 bps to 3.75% – Market Reactions

[Ben Graham]

The Fed just cut rates by 25 bps – Neutral tone (neither dovish or hawkish)

It was largely expected and the Fed doesn't like to surprise Markets, so they tend to follow pricing closely (or send out a message through Nick TImiraos just before in case they had a last-minute change of mind).

You can get access to the detailed report right here:

Breaking News: US Federal Reserve cuts rates by 25 bps, bringing target range to 3.50 - 3.75%

There has been extra mentions of a US labor market getting weaker, but the Fed still made balanced remarks on their dual mandate, implying that they are still concerned with inflation.

The dot plot suggests between 50 to 75 bps of cutting throughout 2026, less than what the Market priced ahead of the meeting, so this might hurt risk-assets a bit.

The US Dollar is getting rejected however so the immediate buying can be sustained for a bit.

Still, Stocks (particularly the Dow Jones), Bitcoin, and commodities (Gold, Silver, Oil) are rallying after the decision.

Bonds are retreating from their spikes however, so interest rate markets are not as optimistic about this cut.

Keep in mind that things are still subject to a lot of change as Powell will soon appear.

You can get access to his live speech right here.

Let's dive into an outlook of the Market and watch the few charts from the Summary of Economic Projections.

Market Reactions

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Market Outlook with the S&P 500, Oil, 10-Year Bonds, Gold, Bitcoin and the USD

Economic Projections – Very positive for the economy

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Economic projections of Federal Reserve Members for 2026 and forward – Source: Federal Reserve

You can get access to the Economic Projections right here. Very interesting report.

Dot Plot

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Fed's Dot Plot – Source: Federal Reserve

The plot is scattered throughout, but overall, it seems that the Fed sees 3.00% to 3.25% rates by the end of 2026.

Some members seem to express that rates should stay here.

Get ready for Powell as things may move very erratically! Watch for comments on Inflation and Employment.

Things will move even more as Markets learn more on the only Fed's concern: Employment, NFP releases on December 16.

Safe Trades and Good luck for Powell!

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