The US Federal Reserve has cut its key interest rate for the third time this year

The regulator also raised its GDP growth forecast for 2025 and 2026

On December 10, the US Federal Reserve System (Fed) lowered the federal funds rate by 25 basis points to 3.5-3.75% per annum. This was announced in a statement by the Federal Open Market Committee (FOMC).

This is the third time this year that borrowing costs have been lowered.

«Current indicators suggest that economic activity is growing at a moderate pace. Job growth has slowed this year, and the unemployment rate rose slightly through September. More recent data are consistent with these trends. Inflation has risen since the beginning of the year and remains somewhat elevated,» the statement said.

As noted, the FOMC aims to achieve maximum employment and inflation of 2% over the long term. Uncertainty about the economic outlook remains high, and risks to the labor market have increased in recent months.

The Fed lowered its inflation forecast for the United States (PCE index) for 2026 to 2.4% from 2.6% expected in September. Expectations for 2027 and 2028 remained at 2.1% and 2%, respectively. This year, inflation will be 2.9% (previously expected to be 3%).

The US central bank raised its US GDP growth forecast for 2026 to 2.3% from 1.8% and for 2027 to 2% from 1.9%. At the end of this year, the country’s economy will grow by 1.7% (previous expectations were 1.6%).

Recall that in November, the European Commission improved its forecast for EU GDP growth in 2025 to 1.4% from 1.1%, which was expected in May. At the same time, the economic growth estimate for 2026 was lowered to 1.4% from 1.5%, which was forecast in the spring. In 2027, the bloc’s economy is expected to grow by 1.5%.