The Federal Reserve lowered interest rates by one-quarter of a percentage point on Dec. 10, 2025. This was the third meeting in a row that the Fed board lowered rates. The U.S. labor market seems to be weakening, but inflation is rising and the Fed usually increases interest rates if needed to try to maintain inflation rates below 2%. The 12-member committee appears divided on policy decisions, so it’s uncertain whether there’ll be another rate cut in January. The lower Fed rate will affect everything from business borrowing to mortgage rates to investment returns. Investment earnings can have an immediate impact on income and, by extension, tax collections.
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