As was widely expected in the global markets, the US Federal Reserve cut its policy rate by 25 bps in its FOMC meeting on December 10. This was the 3rd rate cut by FOMC in 2025.

However, there was a divided view in the FOMC, which voted 9:3 for the 25 bps cut, with 3 dissents – 2 hawkish dissents for ‘no cut’ and 1 dovish dissent for ’50 bps cut’.

The Fed also announced that it will resume buying of Treasury bills, starting the end of this week.

The Fed faces a difficult crossroad: continue easing to support a softening labour market, or signal caution with inflation being stubbornly high. According to the Fed Chair Jerome Powell, the Fed rate cut is driven by rising job risks amidst inflation pressures being tilted to the upside.

The US CPI has been steadily rising over the past few m

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