Federal Reserve Chairman Jerome Powell reacts during a press conference after the Federal Reserve Board’s Federal Open Market Committee meeting in Washington, DC on December 10, 2025.
Chip Somodevilla | Getty Images
As expected, it was a “hawkish cut.” Still, investors managed to find some gifts wedged between the lumps of coal.
Two regional bank presidents, Jeffrey Schmidt of Kansas City and Austan Goolsby of Chicago, wanted rates to remain unchanged even though the Federal Reserve cut interest rates in the states on Wednesday.
Their warnings were also reflected in a “dot plot” of the Fed’s rate outlook, which showed officials making one cut in 2026 and another in 2027.
Even the Fed’s interest rate statement was recycled from its December 2024 meeting, beginning a nine-month period of no interest rate cuts until September of this year.
So why did the US market rise after the meeting?
The biggest surprise was the Fed’s announcement that it would begin buying $40 billion in Treasury bills starting Friday. This movement increases the money supply in the economy. In other words, this is a secret way to ease conditions and help support financial markets.
Second, Chairman Jerome Powell dismissed speculation about future rate hikes.
“I don’t think raising rates is anyone’s base case scenario at this point,” Powell said. “I haven’t heard anything like that.”
Federal Reserve officials also believe that the U.S. economy remains resilient. Both companies collectively raised their forecast for economic expansion in 2026 to 2.3% from the 1.8% expected in September.
“We have an extraordinary economy,” Powell said.
And the market may be gearing up for a special end to the year.
“The final interest rate decision of 2025 essentially paves the way for a year-end Santa Claus rally, with the S&P 500 poised to pass the milestone of 7,000 in the coming weeks,” said Jose Torres, senior economist at Interactive Brokers.
That would be a pretty decent Christmas surprise for investors.
—CNBC’s Jeff Cox contributed to this report.
What you need to know today
And finally…
U.S. President Donald Trump speaks about the U.S. economy and affordability at the Mount Airy Casino Resort in Mount Pocono, Pennsylvania, on December 9, 2025.
Jonathan Ernst | Reuters
Trump slams European leaders as ‘weak’ as they try to impress him
US President Donald Trump once again angered his European allies by describing them as “weak” in an interview with Politico published on Tuesday. President Trump criticized the region’s response to the Ukraine war, saying, “I don’t think they know what to do.”
The comments will be jarring for Europe in the wake of Trump’s efforts to aid Ukraine, which he has frequently downplayed. Instead, U.S. officials have been consulting with Russian and Ukrainian officials on a draft Ukraine peace plan, without a seat at the table, leaving Europe to watch.
— Holly Ellyatt
