Source: Federal Reserve; Compiled by: Jinse Finance
FOMC Statement
Current indicators suggest that economic activity is expanding at a moderate pace. Job growth has slowed this year, and the unemployment rate rose slightly in September. Recent indicators also confirm this trend. Inflation has risen since the beginning of the year and remains at a relatively high level.
The FOMC's objectives are to achieve maximum employment and 2 percent inflation in the long run. Uncertainty surrounding the economic outlook remains high. The FOMC closely monitors the risks to its dual mandate and believes that downside risks to employment have increased in recent months.
To support its objectives and in light of changes in the balance of risks, the FOMC decided to lower the target range for the federal funds rate by 0.25 percentage points to 3.5% to 3.75% . In considering the magnitude and timing of further adjustments to the target range for the federal funds rate, the Committee will carefully assess current data, the evolving economic outlook, and the balance of risks. The Committee remains firmly committed to supporting maximum employment and restoring inflation to its 2 percent objective.
In assessing the appropriate stance of monetary policy, the FOMC will continue to closely monitor the implications of emerging information for the economic outlook. The FOMC stands ready to adjust the stance of monetary policy as appropriate should risks arise that could hinder the achievement of its objectives. The FOMC's assessment will take into account a wide range of information, including labor market conditions, inflationary pressures and expectations, as well as financial and international developments.
The FOMC believes that reserves have fallen to an adequate level and will begin purchasing short-term Treasury securities as needed to maintain an adequate supply of reserves.
Those who voted in favor of monetary policy actions include:
Chairman Jerome H. Powell; Vice Chairs John C. Williams; Michael S. Barr; Michelle W. Bowman; Susan M. Collins; Lisa D. Cook; Philip N. Jefferson; Alberto G. Mussalaim; and Christopher J. Waller.
Those who voted against the action included:
Stephen I. Milan favors lowering the target range for the federal funds rate by 0.5 percentage points at this meeting;
And Austan D. Goolsby and Jeffrey R. Schmid, who favored keeping the target range for the federal funds rate unchanged at this meeting.
On the implementation of monetary policy
In order to implement the monetary policy statement issued by the Federal Open Market Committee on December 10, 2025, the Federal Reserve has made the following decisions:
The Federal Reserve Board of Governors unanimously voted to lower the interest rate on outstanding reserves to 3.65%, effective December 11, 2025.
As part of its policy decision, the Federal Open Market Committee (FOMC) voted to instruct the New York Federal Reserve Bank's open market trading desk to execute trades in its system open market accounts in accordance with the following domestic policy directive, pending further instructions: "Effective December 11, 2025, the FOMC instructs the trading desk to:
The federal funds rate will be maintained within the target range of 3.5% to 3.75% through open market operations, if necessary.
The standing overnight repurchase agreement operation was conducted at an interest rate of 3.75%.
The company will conduct standing overnight reverse repurchase agreement operations at an issuance rate of 3.5%, with a daily limit of $160 billion per transaction.
The system increases its securities holdings in its open market accounts by purchasing government bonds, and, if necessary, other government bonds with a remaining maturity of three years or less, in order to maintain adequate reserve levels.
The Federal Reserve will repay all Treasury securities held by it through auction. All agency securities held by the Federal Reserve will be reinvested in short-term Treasury bonds.
In this action, the Federal Reserve Board of Governors unanimously voted to lower the benchmark lending rate by 0.25 percentage points to 3.75%, effective December 11, 2025. In taking this action, the Board approved requests submitted by the boards of directors of the Federal Reserve Banks of New York, Philadelphia, St. Louis, and San Francisco to set this rate.
Regarding Reserve Management Purchases (RMP)
On December 10, 2025, the Federal Open Market Committee (FOMC) instructed the Federal Reserve Bank of New York's Open Market Trading Desk (hereinafter referred to as the "Slot") to increase its System Open Market Account (SOMA) securities holdings to maintain adequate reserve levels by purchasing Treasury securities in the secondary market (or, if necessary, purchasing Treasury securities with a remaining maturity of three years or less). The size of these Reserve Management Purchases (RMPs) will be adjusted based on anticipated trends in the Fed's demand for liabilities and seasonal fluctuations, such as those affected by tax payment dates.
The amount of the monthly Reserve Management Purchase Plan (RMP) will be announced around the ninth business day of each month, along with a provisional purchase plan for the next thirty days.
The trading desk plans to release its first plan on December 11, 2025, at which time it will purchase approximately $40 billion in Treasury securities; purchases will begin on December 12, 2025. The trading desk anticipates that the pace of reserve purchases will remain high in the coming months to offset the expected significant increase in non-reserve liabilities in April. Thereafter, the total amount of purchases is likely to slow significantly based on the expected seasonal changes in the Fed's liabilities. The purchase amount will be adjusted appropriately based on the outlook for reserve supply and market conditions.
In October, the department was also instructed to reinvest the agency securities held by the Federal Reserve into Treasury securities through secondary market purchases. The monthly purchase program will include Reserve Management Purchases (RMPs) and these purchases.
The trading platform plans to allocate monthly secondary market purchases to the two Treasury bond sectors. The purchase volume for each sector will be determined based on sector weighting. These sector weightings will be based on the 12-month average of the outstanding face value of each sector as a percentage of the total outstanding Treasury bonds of the two sectors as of the end of September 2025.
Regarding the overnight repurchase operation
According to the implementation notes issued by the FOMC on December 10, 2025, the Federal Reserve Bank of New York's Open Market Trading Desk (the Trading Desk) will make the following adjustments to its Standing Overnight Repurchase Agreement (repurchase) operations, effective December 11, 2025.
Going forward, the standing overnight repurchase operation will no longer have a maximum transaction limit and will adopt a fully allocated model , conducted through the FedTrade Plus trading platform. Eligible counterparties can submit one transaction application for each security type during the two daily trading sessions, with a maximum single application amount of $40 billion. Transaction applications will be allocated immediately after the close of trading, based on the overnight repurchase operation rate. All other operational parameters remain unchanged.
