Here are five big takeaways from Wednesday’s Fed interest rate decision.

The Federal Reserve approved a long-awaited quarter-point rate cut Wednesday in a meeting filled with intrigue and surprises. Here are five key takeaways.

The hawks’ ideas are real — in a sense. Wall Street had expected the Fed to warn that the hurdles for further easing would be high, and to cut interest rates as well as take strong precautionary measures. But the market didn’t seem to care. Stocks posted solid gains on the day, but US Treasury yields fell. While the 9-3 vote may suggest broad support for the move, the Federal Open Market Committee begs to differ. Three negative votes is a lot, in fact, the highest number since September 2019. And one of the “no” votes came from an unlikely source: Chicago Fed President Austan Goolsby. Governor Stephen Milan had wanted to cut interest rates by 0.5 percentage point, but Goolsby and Kansas City Fed President Jeffrey Schmidt supported keeping rates unchanged. A total of six of the 19 participants at the meeting said they did not vote for a rate cut, voicing the “moderate opposition” who believe that monetary easing has gone far enough. In other words, the “dot plot” of each official’s interest rate views will remain largely unchanged over the next few years, with the median showing only one rate cut in 2026 and another cut in 2027 before the federal funds rate settles around a neutral 3%. The market largely took the committee at its word, but bond buying returned as futures prices later in the day showed there was a non-negligible 38% chance of two rate cuts next year. Well, it’s actually not bonds, but paper money, which the Fed will start buying again starting Friday. As the overnight funding market comes under pressure, the central bank announced it will buy $40 billion in short-term bills as part of a monthly program aimed at stabilizing the market and keeping the federal funds rate within a quarter-point range. Although the level of buying is likely to change, some market participants saw the announcement as stealth relief that would be positive for risk assets. Chairman Jerome Powell was mostly optimistic about growth, and so was the committee. “Our economy is in an abnormal state,” said Powell, who has three terms left as chairman. FOMC officials similarly raised their views, raising their gross domestic product (GDP) growth forecast for 2026 by 0.5 percentage point to 2.3%.

“Given today’s lack of consensus from the committee, the delay in releasing traditional economic data, and the appointment of a new Fed chair in early 2026, we think the Fed is likely to remain on hold for some time. Still, continued weakness in some labor indicators makes sure that another 25bps rate cut in January is a possibility.” — Rick Rieder, head of fixed income at BlackRock and reported candidate to replace Mr. Powell

“The Fed’s guidance is probably less informative than usual about the outlook for interest rates. There are two reasons for that. First, the government shutdown delayed the release of economic data, so we know less than usual about the current state of the economy. Second, the Fed B’s guidance does not take into account how its approach might change after Powell’s term ends in May, and it appears likely that the Fed will cut rates by more than the amount indicated by the December dot plot. — Bill Adams, Chief Economist, Comerica Bank

“The Fed has raised its growth expectations for next year, which, along with the extra cash to U.S. households from changes in tax policy, should cast doubt on the direction of monetary policy. Our estimates are that this move significantly raises the bar for expected rate cuts at the Fed’s next meeting in January.” — Joseph Brusuelas, RSM Chief Economist