The US Federal Reserve (Fed) announced on Wednesday that it lowered the policy rate, federal funds rate, by 25 basis points to the range of 4.25%-4.5% following the December meeting.
Follow our live coverage of the Fed policy announcements and the market reaction.
The Fed made small changes to its policy statement from the November meeting, reiterating that they will assess incoming data, evolving outlook and balance of risks when considering the extent and timing of additional rate adjustments.
Key takeaways from Fed policy statement
“Risks to inflation and employment goals roughly in balance.”
“Fed lowers reverse repo rate by 30 basis points to 4.25% versus 25 bps cut to fed funds rate.”
“Fed vote in favor of rate cut was 11-1; Cleveland Fed President Hammack dissented, preferring to leave policy rate unchanged.”
Alongside the policy statement, the Fed also published the revised Summary of Economic Projections, with key highlights listed below.
“Fed officials’ median view of fed funds rate at end-2024 4.4% (prev 4.4%).”
“Fed officials’ median view of fed funds rate at end-2025 3.9% (prev 3.4%).”
“Fed officials’ median view of fed funds rate at end-2026 3.4% (prev +2.9%).”
Fed officials’ median view of fed funds rate at end-2027 3.1% (prev +2.9%).”
“Fed officials’ median view of fed funds rate in longer run 3.0% (prev 2.9%).”
“Fed projections imply 50 basis points of rate cuts in 2025, another 50 bps in 2026.”
“Fed projections show longer-run policy rate at 3.0% vs 2.9% in September projections.”
“Fed projections show one of 19 officials see no cuts in 2025, 3 see one cut, 10 see 2 cuts, 3 see 3 cuts, one sees 4 cuts, one sees 5 cuts.”
“Fed projections show stronger growth and stronger inflation in 2025.”
“Fed policymakers see 4.3% unemployment rate at end of 2025 versus 4.4% in September projections.”
“Fed policymakers see end-2025 PCE inflation at 2.5% versus 2.1% in September; core seen at 2.5% versus 2.2%.”
“Fed policymakers see 2.1% GDP growth in 2025 versus 2.0% in September, see longer-run growth at 1.8%, unchanged from September.”
Market reaction to Fed policy announcements
The US Dollar gathers strength against its rivals following the Fed policy announcements. At the time of press, the USD Index was up 0.6% on the day at 107.58.
US Dollar PRICE Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.63% | 0.50% | 0.59% | 0.44% | 1.07% | 1.12% | 0.47% | |
| EUR | -0.63% | -0.12% | -0.03% | -0.18% | 0.44% | 0.50% | -0.15% | |
| GBP | -0.50% | 0.12% | 0.06% | -0.06% | 0.56% | 0.62% | -0.04% | |
| JPY | -0.59% | 0.03% | -0.06% | -0.15% | 0.48% | 0.55% | -0.13% | |
| CAD | -0.44% | 0.18% | 0.06% | 0.15% | 0.62% | 0.68% | 0.03% | |
| AUD | -1.07% | -0.44% | -0.56% | -0.48% | -0.62% | 0.06% | -0.59% | |
| NZD | -1.12% | -0.50% | -0.62% | -0.55% | -0.68% | -0.06% | -0.65% | |
| CHF | -0.47% | 0.15% | 0.04% | 0.13% | -0.03% | 0.59% | 0.65% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
This section below was published as a preview of the Federal Reserve’s policy decisions at 11:00 GMT.
- The Federal Reserve is widely expected to lower the policy rate by 25 bps at the last meeting of 2024.
- Fed Chairman Powell’s remarks and the revised dot plot could provide important clues about the interest-rate outlook.
- The US Dollar’s valuation could be impacted significantly heading into the Christmas holiday.
The US Federal Reserve (Fed) will announce monetary policy decisions following the December policy meeting on Wednesday. Alongside the policy statement, the US central bank will publish the revised Summary of Economic Projections (SEP), also known as the dot plot.
The CME FedWatch Tool shows that investors are fully pricing in a 25 bps Fed cut, which would bring the policy rate down to the range of 4.25%-4.5%. The market positioning suggests that the US Dollar’s (USD) reaction to the interest-rate decision alone could remain short-lived. Instead, investors will assess the details of the dot plot and scrutinize comments from Fed Chairman Jerome Powell in the post-meeting press conference.
The SEP in September showed that Fed officials’ median view of the fed funds rate at the end of 2025 stood at 3.4%. Revisions to interest rate expectations, inflation and growth projections for next year could provide important clues about the policy outlook and influence the USD’s valuation.
Previewing the Fed’s last policy meeting of the year, “the FOMC is expected to announce an additional rate cut, with the Committee easing rates by 25bp to 4.25%-4.50%,” said TD Securities analysts in a recently published report and added:
“While we think the Fed will remain keen on projecting additional policy easing for 2025, our view is that guidance regarding the pace of rate cuts will be more cautious going forward. This might be interpreted as a hawkish rate cut by market participants.”
When will the Fed announce its interest rate decision and how could it affect EUR/USD?
The US Federal Reserve is scheduled to announce its interest rate decision and publish the monetary policy with the revised dot plot on Wednesday at 19:00 GMT. This will be followed by Fed Chairman Jerome Powell’s press conference starting at 19:30 GMT.
An upward revision to the end-2025 interest-rate projection could be assessed as a hawkish tilt in the policy outlook and trigger a USD rally with the immediate reaction, causing EUR/USD to push lower. On the other hand, a downward revision could have the opposite effect on the pair’s action.
Powell is likely to be asked whether policymakers took US President-elect Donald Trump’s proposed policies, especially regarding tariffs, into account when penciling down their projections for next year.
In case Powell notes that they will take a gradual approach to further policy easing because of the uncertainty created by the potential tariffs on the inflation outlook, the USD could preserve its strength. On the other hand, if Powell downplays inflation jitters and reemphasizes their willingness to keep the labor market strong next year, this could be seen as a dovish tone and make it difficult for the USD to stay resilient against its rivals. In this scenario, EUR/USD could stage a rebound in the near term.
Eren Sengezer, European Session Lead Analyst at FXStreet, provides a short-term technical outlook for EUR/USD:
“EUR/USD remains technically bearish in the near term as it remains within the descending regression channel coming from late September. Additionally, the Relative Strength Index Indicator (RSI) on the daily chart stays near 40, highlighting the lack of buyer interest.”
“On the downside, 1.0400 (static level) aligns as immediate support before 1.0260 (lower limit of the descending channel) and 1.0200 (static level, round level). In case EUR/USD rises above 1.0600, where the Fibonacci 23.6% retracement level of the October-December downtrend is located, and starts using this level as support, sellers could be discouraged. In this scenario, 1.0690-1.0700 (50-day Simple Moving Average, Fibonacci 38.2% retracement) and 1.0800 (Fibonacci 50% retracement) could be seen as next resistance levels.”
Dot Plot FAQs
The “Dot Plot” is the popular name of the interest-rate projections by the Federal Open Market Committee (FOMC) of the US Federal Reserve (Fed), which implements monetary policy. These are published in the Summary of Economic Projections, a report in which FOMC members also release their individual projections on economic growth, the unemployment rate and inflation for the current year and the next few ones. The document consists of a chart plotting interest-rate projections, with each FOMC member’s forecast represented by a dot. The Fed also adds a table summarizing the range of forecasts and the median for each indicator. This makes it easier for market participants to see how policymakers expect the US economy to perform in the near, medium and long term.
The US Federal Reserve publishes the “Dot Plot” once every other meeting, or in four of the eight yearly scheduled meetings. The Summary of Economic Projections report is published along with the monetary policy decision.
The “Dot Plot” gives a comprehensive insight into the expectations from Federal Reserve (Fed) policymakers. As projections reflect each official’s projection for interest rates at the end of each year, it is considered a key forward-looking indicator. By looking at the “Dot Plot” and comparing the data to current interest-rate levels, market participants can see where policymakers expect rates to head to and the overall direction of monetary policy. As projections are released quarterly, the “Dot Plot” is widely used as a guide to figure out the terminal rate and the possible timing of a policy pivot.
The most market-moving data in the “Dot Plot” is the projection of the federal funds rate. Any change compared with previous projections is likely to influence the US Dollar (USD) valuation. Generally, if the “Dot Plot” shows that policymakers expect higher interest rates in the near term, this tends to be bullish for USD. Likewise, if projections point to lower rates ahead, the USD is likely to weaken.
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