What Happens If The Fed Cuts Rates Before Christmas Eve? 2025

A pre-Christmas Fed rate cut could boost spending, shift bond yields, lift risk assets and increase demand for crypto.

The Fed’s Dec. 9-10 meeting carries unusual weight as markets wait to see whether another rate cut will arrive before Christmas, shaping bonds, equities and crypto.

After two cuts in 2025, rates now sit at 3.75%-4.00%. Labor weakness and softer inflation support further easing, but officials remain divided because inflation risks have not fully cleared.

A cooling job market, easing inflation and the end of quantitative tightening could justify another reduction and align with year-end liquidity needs.

Sticky inflation, gaps in economic data caused by the government shutdown and a divided Fed may push policymakers to keep rates unchanged this December.

When the US Federal Reserve meets on Dec. 9-10 to decide on interest rates, it will not be just another routine gathering. Markets are watching closely to see what direction policymakers choose. Will the Fed cut rates again before the holidays? A pre-Christmas Eve reduction could send waves through bonds, stocks, credit markets and crypto.

This article explains why the Fed’s pre-Christmas meeting is significant and outlines the factors supporting or opposing a potential rate cut. It also highlights what to watch in the coming weeks and how a Fed move could affect crypto and other financial markets.

Central banks typically cut rates when inflation is easing, economic growth slows or financial conditions become too tight. In late October, the Federal Reserve lowered rates by 25 basis points, setting the federal funds target range at 3.75%-4.00%, its lowest level since 2022. The move followed another 25-basis-point cut in September 2025, making it the Fed’s second rate reduction of the year.

The move came amid clear signs of a cooling labor market. October recorded one of the worst monthly layoff totals in more than two decades, according to multiple labor-market reports, reinforcing concerns about weakening job conditions. The Fed’s October statement echoed this trend, noting that risks to employment had increased even as inflation remained somewhat elevated.

At a press conference, Fed Chair Jerome Powell stressed that a December cut is “not a foregone conclusion.” Yet economists at Goldman Sachs still expect a cut, pointing to clear signs of labor market weakness. Fed officials remain divided, with some emphasizing inflation risks and the limited room for further easing.

Source: CoinTelegraph