Latest Finance-Economy News
Fed Delivers Third Rate Cut of 2025 at December FOMC Meeting
The Federal Reserve reduced the federal funds rate by 25 basis points, marking the third cut this year after September and October moves, as policy enters neutral range. Policymakers project moderate economic expansion with solid consumer spending and growing business investment, despite subdued housing and government shutdown impacts.
Only one more cut expected in 2026, signaling a cautious stance.
FOMC Projects 1.7% GDP Growth for 2025, Rising to 2.3% in 2026
Updated Summary of Economic Projections shows real GDP at 1.7% for 2025 (up slightly from prior) and 2.3% for 2026, indicating stronger growth ahead. Unemployment expected to reach 4.5% by end-2025 before declining to 4.2% long-term, with data reliability questioned due to shutdown.
Inflation forecasts improved to 2.9% PCE in 2025 falling to 2.0% by 2028.
Labor Market Cools as Unemployment Hits 4.4%, Prompting Fed Action
Fed cited stabilizing labor conditions with unemployment edging to 4.4% and slowing job gains as key to the rate cut decision. Hiring remains low while firings are subdued, with household and firm perceptions of job availability declining.
Risks shifted toward softer employment, removing prior 'low unemployment' language.
Markets Show Resilience in 2025 Despite Political Noise, AI Drives Outlook
2025 markets outperformed sentiment amid tariffs and DOGE, rebounding on strong earnings and Big Tech AI spending projected over $400B in 2026. Political transitions digested well as focus returned to company performance.
Consumer tax benefits from One Big Beautiful Bill Act to deliver $517B refunds, boosting Q1 2026 spending.
Fed Inflation Projections Ease: Core PCE to 3.0% in 2025
Summary of Economic Projections lowered core PCE inflation to 3.0% for 2025 and 2.5% in 2026, with growth forecasts upgraded. Participants see convergence to 2% inflation, 4% unemployment, and 3% fed funds long-term.
Powell noted no base case for hikes, risks favor easing amid elevated but nonthreatening inflation.
Tax Refunds to Surge 44% in 2026, Fueling Consumer Spending Boom
Average tax refunds expected to rise from $3,050 in 2025 to over $3,600 in 2026 due to stimulus, front-loading consumer spending in H1. Lower rates and deregulation spur tech debt issuance for AI infrastructure and mega-mergers.
Employment to firm post-shutdown disruptions, aided by AI boom and policy clarity.
Flash PMI Surveys Set for December Release Across Major Economies
Upcoming flash PMI for US, eurozone, UK, Japan, India, Australia to gauge December activity; US led developed markets in November but moderated. Eurozone and Australia accelerated growth, UK slowed on policy uncertainty, India tops emerging markets.
Provides insights into expansion rates amid global variances.
Fed Pauses After Third Cut, Eyes One More in 2026 Amid Uncertainty
Post-December cut, Fed expected to pause with debate on future trajectory; government shutdown delayed November hiring into December. Greater policy clarity to support lending and CRE activity with lag.
Markets reacted with lower yields and curve normalization.
Consumer Spending Resilient, AI Investment Bolsters 2026 Growth Pickup
Fed and forecasters expect growth pickup from 1.7% in 2025, driven by resilient consumer spending and AI-related data center investments. Q3 growth moderate at sub-trend pace, financial conditions eased.
Baseline avoids sharp downturn risks.
Global Cotton Trade Outlook Revised Downward in December Update
Global cotton trade forecast cut by 275,000 bales to 43.7 million, with Bangladesh imports down 100,000 to 8.0 million. Reflects adjustments in key markets amid broader economic letters.
Impacts commodity-related economic indicators.
FOMC Cuts Funds Rate to Support Moderating Economy
FOMC reduced federal funds target by 25bps on December 10, aligning with weakening labor data. Economic activity expanding moderately per Fed statement.
Projections signal stable path ahead.