Markets opened the week focused on one outcome — and they got it. The Federal Reserve delivered a third consecutive 25 bp cut, lowering the policy range to 3.5%–3.75%, a move widely viewed as the final rate cut of 2025 and very likely the last cut of Jerome Powell’s term as Fed Chair.
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Powell described the move not as the start of a new easing cycle, but as the completion of a normalization process — meaning the Fed believes it has now undone the most restrictive part of its post-inflation tightening without tipping the economy into recession. After three cuts since September, policymakers see rates as having moved from clearly restrictive toward neutral, reducing pressure on hiring and credit-sensitive sectors while still remaining high enough to keep inflation trending lower.
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The Fed paired that message with modest upgrades to its 2026 growth outlook, small downward revisions to inflation forecasts, and repeated emphasis that much of today’s inflation pressure reflects tariff-related cost pass-through, which officials expect to fade over time. Just as importantly, Powell made clear that normalization does not imply continued easing. The policy statement reverted to more cautious language around “the extent and timing” of future adjustments, signaling a much higher bar for additional cuts.
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In short: the Fed believes it has done enough to stabilize the economy — and is now prepared to wait.

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