The Federal Open Market Committee voted on 18 December 2024 to lower the target range for the federal funds rate by 25 basis points to 4.25%–4.50%, delivering the third consecutive cut since the easing cycle commenced in September. The decision was reached by an 11-1 majority, with Cleveland Fed President Beth Hammack dissenting in favour of holding rates steady at the December meeting, making hers the sole vote against the reduction.
The 25 basis point reduction completes 100 basis points of cumulative easing since September 2024. The FOMC's statement characterised the US economy as expanding at a solid pace, with labour market conditions having eased from their earlier tightness but unemployment remaining low. Inflation was described as making progress toward the 2% objective but as remaining somewhat elevated.
CUMULATIVE 100 BASIS POINTS OF EASING SINCE SEPTEMBER
The three consecutive reductions followed a tightening phase during which rates rose from near zero to over 5% between early 2022 and mid-2023.
Looking ahead, the FOMC's communications have emphasised a data-dependent posture, with policymakers monitoring incoming inflation readings, employment reports, and broader activity indicators before committing to the timing and magnitude of any further adjustments. Policymakers' median projections pointed to only two quarter-point cuts in 2025, down from four projected in September.