• The Federal Reserve cut its benchmark interest rate to between 4.25% and 4.5% on Wednesday.
• The central bank also projected two cuts next year instead of four, sending stocks tumbling.
• Here's how analysts, economists, and other experts reacted to the Fed decision and market reaction.

The Federal Reserve cut its benchmark interest rate on Wednesday to a range of 4.25% to 4.5%, bringing its decline since mid-September to 100 basis points.

Wall Street usually celebrates rate cuts as lowering borrowing costs drives spending, investing, and hiring. Reducing rates also signals inflation is under control, and makes risk assets like stocks relatively more attractive by trimming yields on safer assets like Treasuries.

Yet stocks tanked because Fed officials projected two cuts next year, down from four previously. Fed Chair Jerome Powell also said the central bank expects to ease its monetary policy more slowly in the months ahead.

Here's a roundup of how analysts, economists, strategists, investors, and other experts reacted to the latest Fed decision in their morning research Thursday.

Matt Britzman, senior equity analyst at Hargreaves Lansdown

"US markets played the part of Scrooge on Wednesday, tumbling as the Federal Reserve's hawkish tone dampened holiday cheer.

Investors should see this as a healthy spot of profit-taking rather than an end to the party, after what's been a fantastic run for markets since the US election."

Russ Mould, investment director at AJ Bell

"Markets are normally good at reading the signs, but the sell-off on Wall Street last night would suggest investors had started on the Christmas sherry a bit early and were caught out by the Fed's announcement about where rates might go in 2025.

The 3% drop in the S&P 500 is a wake-up call that US markets are not a one-way ticket to the moon.

The fact futures prices are showing a rebound in the main US equities on Thursday would suggest we are not at the start of a full-blown market correction. Instead, it's more likely that investors are now sitting up and paying more attention to what could go wrong, rather than only focusing on the positives. That's long overdue and a healthy development."

David Rosenberg, founder and president of Rosenberg Research

"This is a Fed that really has no faith in its view at any time and is willingly reactive as opposed to proactive even though its actions affect the economy with long lags.

You would have thought that between the commentary and forecast changes that the world has changed dramatically since the jumbo rate cut just three months ago. It clearly does not take much to cause this Fed to swing its view around. I can guarantee that it will shift again."

Stephen Koopman, senior macro strategist at Rabobank

"'We had a year-end inflation forecast, and it's kind of fallen apart.'

Not exactly the confidence-inspiring line you'd expect from a Fed chair. But Jerome Powell's performance at yesterday's press conference wasn't his finest hour. In what might have been the most uncomfortable showing of his tenure, Powell ceded the stage to the hawks, visibly strained as he tried to sell a strategy he didn't fully appear to endorse.

Powell flagged inflation 'moving sideways' and 'higher uncertainty' around its trajectory. These admissions reveal a central bank increasingly unsure of its footing, with rates markets now expecting just one cut for 2025 (as we do), and with no real consensus on when that final cut would arrive."

Jamie Cox, managing partner for Harris Financial Group

"Markets have a really bad of habit of overreacting to Fed policy moves. The Fed didn't do or say anything that deviated from what the market expected — this seems more like, I'm leaving for Christmas break, so I'll sell and start up next year.

The good news is that this 10-day sell-off should lay the path for a Santa Rally leading into next week."

Chris Zaccarelli, chief investment officer for Northlight Asset Management

"Santa came early and dropped a 25-bps rate cut in the market's stocking but accompanied it with a note saying that there would be coal next year."

The market is forward-looking and ignored the good news of today's rate cut and instead focused on the paucity of rate cuts for next year."

Jochen Stanzl, chief market analyst at CMC Markets.

"What was heard last night from the Fed as an accompaniment to the interest rate cut is a showstopper for the stock market.

The Fed is sending a clear signal that it has almost completed the phase of interest rate cuts. The year 2025 will be a significant break in the Fed's rate-cutting cycle.

The Trump blessing could quickly turn into a curse. If the market expects yields to rise further, it is unlikely that the Fed will intervene against these forces. If inflation data continues to rise in January and February, then that could be it for the interest rate cuts."

Adam Turnquist, chief technical strategist for LPL Financial

"While the Fed is taking all the heat for today's sell-off, a reality check from overbought conditions, deteriorating market breadth, and rising rates was arguably overdue.

Overall, today's FOMC meeting brought back some unwanted clouds of uncertainty over monetary policy next year. At a minimum, market expectations have shifted toward a shallower- and slower-than-anticipated rate-cutting cycle. Technically, the near-term risk remains to the upside for 10-year Treasury yields, creating a likely headwind for stocks."

Jean Boivin, head of the BlackRock Investment Institute

"The Fed has poured cold water on already dwindling market hopes for generous rate cuts in 2025.

Given the risk of resurging inflation from potential trade tariffs and a slowdown in immigration that has been cooling pressure in the labor market, market expectations of only two more cuts in 2025 now seem reasonable.

We expected this policy outcome, so it doesn't change our recently upgraded view on US equities. US stocks can still benefit from AI and other mega forces, from robust economic growth and from broad earnings growth — and we see them outperforming international peers in 2025."

Isaac Stell, investment manager at Wealth Club

"With an economy that's going gangbusters and an incoming president with a fiscally loose agenda, you wonder why the Fed felt it necessary to cut.

Is this to curry favor with the incoming administration or is there a bump in the road the Fed can see that the rest of us are missing."

Michael Brown, senior research strategist at Pepperstone

"The FOMC delivered about as hawkish a cut as they could muster up yesterday, and market participants were not particularly pleased about what they heard.

It was, though, a little perplexing to see such a violent market reaction to Powell's remarks, particularly considering how 'every man and his dog' had been expecting this sort of a pivot in the run up to the meeting.

It feels, though, as if markets have overreacted to Powell's message, and that we may have reached something of a hawkish extreme here

Consequently, I'd be a dip buyer of equities here, as strong earnings and economic growth should see the path of least resistance continuing to lead to the upside, offsetting the fading impact of the 'Fed Put.'"

• The Federal Reserve cut interest rates in its final decision of the year.
• It also penciled in two interest-rate cuts in 2025.
• Still, Powell said that Trump's proposed trade policies pose economic uncertainty.

President-elect Donald Trump's potential trade policies could change the Federal Reserve's plans in the coming year.

On Wednesday, the Federal Open Market Committee announced its third consecutive interest-rate cut of the year, lowering rates by 25 basis points. Alongside the rate cut announcement, the Federal Reserve's quarterly Summary of Economic Projections also penciled in two interest-rate cuts for 2025, based on the median prediction from voting Fed members.

Markets took a dive after the Fed announcement, with the Dow Jones Industrial Average closing down over 1,100 points, or about 2.6%.

Fed chair Jerome Powell said during the Wednesday press conference that the decision to cut rates in December was "a closer call" but ultimately "the best decision" to achieve the Fed's dual mandate of maximum employment and price stability.

"I feel very good about where the economy is. Honestly, I'm very optimistic about the economy, and we're in a really good place. Our policy is in a really good place. I expect another good year next year," Powell said.

However, Powell said Trump's proposed tariff plans pose more uncertainty to the US economy in the coming year.

The president-elect has suggested he would impose broad tariffs on imports from key trading partners with the US, including China, Mexico, and Canada, which could lead to higher prices for imported goods.

At this point, Powell said there is too much uncertainty around Trump's trade plans to make any concrete predictions about next year's policy decisions at this point.

"We just don't know really very much at all about the actual policy, so it's very premature to try to make any kind of conclusion," Powell said. "We don't know what will be tariffed, from what countries, for how long, in what size. We don't know whether there'll be retaliatory tariffs. We don't know what the transmission of any of that will be into consumer prices."

Additionally, Powell said some FOMC members did consider fiscal policy, like tariffs, in their economic predictions, showing how the Fed is facing a range of uncertain scenarios in 2025.

He said that once Trump unveils his policies, the Fed would consider any necessary changes to its policy, but "we're just not at that stage."

Over the past year, Powell has reiterated that the Fed should move more cautiously instead of risking cutting rates prematurely and having to course correct later on. That's still the Fed's outlook going into the new year as the central bank continues its goal of reaching 2% inflation.

Amid economic progress over the past year, Powell said that inflation is coming down at a slower pace than the Fed would prefer. The consumer price index, which measures inflation, rose 2.7% year-over-year in November, a slight uptick from the 2.6% reading in October.

"When the path is uncertain, you go a little bit slower," Powell said. "It's not unlike driving on a foggy night or walking into a dark room full of furniture, you just slow down."

• The Federal Reserve is expected to cut interest rates this week by 25 basis points.
• Inflation has ticked back up in recent months, and economists think the job market is still robust.
• The outlook for 2025 is more uncertain while the Fed waits to see how Trump will impact the economy.

The final interest-rate decision of the year is coming this week, and it's likely to give Americans some more financial relief.

On Wednesday, the Federal Open Market Committee is expected to announce another interest-rate cut. As of Monday afternoon, CME FedWatch, which estimates interest-rate changes based on market predictions, forecasts a close to 100% chance the Federal Reserve will cut rates by 25 basis points.

Data out last week showed overall inflation has sped up. The consumer price index's year-over-year growth rate rose from 2.4% in September to 2.6% in October before climbing to 2.7% in November. Core CPI, which excludes volatile food and energy prices, has been holding steady, with a year-over-year change of 3.3% from September to November.

Jerome Powell, chair of the Fed, said at The New York Times' DealBook Conference on December 4 that "we're in a very good place with the economy," but inflation is still not quite where the central bank wants it to be.

"The labor market is better, and the downside risks appear to be less in the labor market, growth is definitely stronger than we thought, and inflation is coming a little higher," Powell said. "So the good news is that we can afford to be a little more cautious as we try to find neutral."

Slower job growth and higher unemployment may add fuel to the argument for continuing to cut, while a tighter-than-expected labor market could lead the central bank to pause while waiting to see if wage growth and inflation speed up.

"I don't think there's that much cause for concern in the labor market data that would lead to them suspending their plan to cut," Julia Pollak, the chief economist at ZipRecruiter, told Business Insider.

Pollak said the quits rate, the latest reading of which was 2.1% in October, is "consistent with a non-inflationary labor market" and that "wage growth at 4% over the year should be sustainable given current productivity growth." Cory Stahle, an economist at the Indeed Hiring Lab, said the US economy continues to add jobs above population growth and has low unemployment.

The unemployment rate increased from 4.1% to 4.2% in November. The three-month average job gain in November was around 173,000, lower than early 2024 but still strong.

"There are still many reasons to be optimistic about the labor market, but also you don't, as a Federal Reserve policymaker, you don't want to wait until things start looking bad to react to that because by then, you might be too late," Stahle said.

The interest rate outlook for 2025 is a bit more uncertain. President-elect Donald Trump has already posed broad tariff threats on key trading partners with the US, including China, Canada, and Mexico. If he implements those tariffs, consumers would likely face higher prices on impacted goods. The Fed could respond to inflationary trade pressures by once again raising interest rates.

However, Powell has so far declined to comment on any policy changes the Fed would consider in response to Trump's tariff threats, saying during the DealBook conference that too much about what Trump might do with tariffs is unknown.

"We can't really start making policy on that at this time. That is something that lies well into the future. We have to let this play out," Powell said, emphasizing that the Fed is making decisions about what's happening in the economy now and not six months from now.

Still, some economists expect 2025 to be another strong year for the economy. Gregory Daco, the chief economist at EY, said that the US "remains on a solid growth trajectory supported by healthy employment and income growth, robust consumer spending, and strong productivity momentum that is helping tame inflationary pressures."

"We expect these positive dynamics will carry into 2025 allowing the Fed to pursue gradual, but cautious, policy recalibration," Daco said in written commentary.

Several economic experts panned New York Gov. Kathy Hochul’s "inflation refunds" she plans to distribute to qualifying New Yorkers as part of her 2025 State of the State initiative.

Last week, Hochul proposed $3 billion in direct payments to about half of the Empire State’s 19 million residents: $300 for single taxpayers making up to $150,000 per year and $500 for joint filers making twice that.

"Because of inflation, New York has generated unprecedented revenues through the sales tax — now, we're returning that cash back to middle class families," Hochul said in a statement announcing the proposal.

However, some economists and economic experts, like Andy Puzder, said the move simply "redistributes [money] to people so the people will vote for them."

REPUBLICANS RIP HOCHUL'S INFLATION REFUNDS AS ‘BRIBE TO MAKE’ NY'ERS ‘LIKE HER’

"If you really wanted to help everybody, and if you have an excess of sales taxes, then you reduce the sales tax," added Puzder, the former CEO of the parent company of Hardee’s and Carl’s Jr., CKE Restaurants. "It’s not difficult math," he added.

Puzder is a lecturer on economics and a senior public policy fellow at Pepperdine University who was considered for Labor secretary in the first Trump administration.

In his work at CKE Restaurants, Puzder increased the average franchise sales volume for the then-struggling Hardee’s from $715,000 in 2001 to more than $1 million a decade later.

The U.S. economy has been in trouble because of the same types of policies forwarded by Hochul and other tax-and-spend Democrats, he said – adding that President Biden’s American Rescue Plan was what lit the fuse on nationwide inflation in the first place.

"If you reduce taxes, fewer people will also be leaving the state," he added, as New York shed another population-based House seat and electoral vote in the decennial census.

Puzder noted a few top Democrats have warned their own leaders against such "refunds" from the government, citing former President Bill Clinton’s Treasury chief Lawrence Summers cautioning the Biden administration that similar handouts in 2021 would drive up inflation.

HOCHUL SPARKS BIPARTISAN OUTRAGE OVER CONGESTION PRICING REBOOT AS DEMS WORRIED TRUMP WOULD BLOCK IT

Former Rep. Dave Brat, R-Va., an economist and currently vice provost of Liberty University in Lynchburg, cited Nobel laureate Milton Friedman’s assertion that inflation is a monetary phenomenon.

Therefore, he said, in Hochul’s case, the better fix for inflation lies not in Albany, but in Manhattan.

"Inflation has to do with how much money the Federal Reserve prints. If she wants to give people money back from the government, that’s fine – but she’s in a prominent position in New York in that the Fed has one of its chief desks there and if you want to solve inflation, you go to the Federal Reserve."

He added that $500 for a family is a "trivial, symbolic move against a massive, hidden tax," noting that with an estimated 22% real-inflation rate over the past four years, $500 in 2020 purchasing power is only worth $390.

Brat added that Democrats’ penchant for such "refunds" put Republicans at a consistent political disadvantage because the GOP essentially has to "compete against Santa Claus" handing out presents versus the right warning the public to "eat their spinach."

Economist EJ Antoni echoed some of the sentiment about the refunds being inflationary themselves, saying that what got the U.S. into inflation in the first place was too much government spending.

"So this idea that we're going to add on another government expenditure, you're essentially just creating a feedback loop," Antoni said.

"Now, that's not to say that New York State alone is going to cause inflation. Inflation comes from the federal government, because the federal government is the one that can't create money, can print money out of nothing. But at the same time, you're still talking about increasing the cost of living for New Yorkers, just in a different way," he said.

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"Any additional government spending is going to have to be paid for one way or another."

Antoni added he could see such payments to the public "snowballing" into more and more payments down the line, which in turn would lead to higher taxes being needed to fund the handouts.

Antoni also said Hochul’s proposal differs from then-President Donald Trump’s COVID-era checks, because the latter came during a time people needed "money to survive" amid stay-at-home orders and various shutdowns of job sectors.

"If the issue is that we need to reduce people's cost of living, the best way to do that would just be to reduce their taxes, not have another payment by the government," he said.

Fox News Digital also reached out to the left-leaning Brookings Institution for a further diverse viewpoint on Hochul’s move.

Fox News Digital also reached out to Hochul's office for comment but did not receive a response by press time. 

• Elon Musk says he wants to eliminate the Consumer Financial Protection Bureau.
• The CFPB was created after the 2008 crisis to protect consumers from financial abuses.
• The CFPB has recouped billions for consumers but has long faced political and legal challenges.

In his efforts to cut government costs, Elon Musk has thrown his support behind slashing a federal office created in the wake of the Great Recession to regulate financial services used by Americans.

"Delete CFPB," Musk wrote on X early Wednesday of the Consumer Financial Protection Bureau. "There are too many duplicative regulatory agencies."

Musk, along with Vivek Ramaswamy, has been tasked with heading up the Trump-created Department of Government Efficiency, or DOGE, and finding ways to reduce spending and streamline bureaucracy within the federal government. The unofficial advisors have floated "deleting" entire agencies, laying off staff, and enforcing return-to-office mandates.

When reached for comment, a spokesperson for Trump's transition team said she had nothing to add to Musk's statement.

While it's unclear how DOGE and the incoming Trump Administration would abolish agencies, if it does, the CFPB could be on the chopping block. Here's a look at its purpose, employee makeup, and political controversies.

Why it was created

The CFPB was created by Congress as part of the 2010 Dodd-Frank Act. The law aimed to strengthen oversight of Wall Street after its risky mortgage lending practices caused the global financial crisis. The CFPB has a broad mandate to protect Americans from deceptive or abusive practices by US financial firms. The agency investigates consumer complaints related to credit cards, loans, bank accounts, and debt collection and enforces consumer protection laws.

Democratic Sen. Elizabeth Warren, a professor at Harvard Law School, originally proposed the agency in 2007. In 2010, President Barack Obama appointed Warren to head the CFPB's steering committee to help establish it.

"The time for hiding tricks and traps in the fine print is over," Warren said during a White House ceremony that year. "This new bureau is based on the simple idea that if the playing field is level and families can see what's going on, they will have better tools to make better choices."

How many people it employs

As of March 2024, the CFPB employed just under 1,700 people, earning an average of about $184,000 a year, according to the Office of Personnel Management. The Bureau's 2024 financial report broke that workforce into six groups; about 43% of CFPB's employees work in the supervision and enforcement of financial institutions, 18% in operations supporting the Bureau's other initiatives, and 14% in research, monitoring, and regulations.

What it has accomplished

Since its founding, the CFPB has recouped $19.6 billion for consumers through direct compensation, canceled debt, and reduced loan principals.

The agency has also issued $5 billion in civil penalties against banks, credit unions, debt collectors, payday lenders, for-profit colleges, and other financial services companies. That money is deposited into a victims' relief fund, with nearly 200 million people eligible for relief.

Some of CFPB's most high-profile enforcement actions have been against Bank of America and Wells Fargo. The agency in 2023 accused Bank of America of harming hundreds of thousands of customers by charging illegal fees, withholding credit card cash and reward points, and enrolling them in credit card accounts without their knowledge. Bank of America agreed to pay $250 million. In 2022, Wells Fargo agreed to pay $3.7 billion — a record sum — after a CFPB investigation alleged the bank mismanaged auto loans, mortgages, and deposit accounts, causing some customers to lose their vehicles and homes.

Last week, the agency finalized a rule expanding its oversight to big tech companies like Apple, Google, and Venmo, which offer digital wallets and payment apps and process some 13 billion transactions a year. Earlier this year, the CFPB also limited credit card late fees to $8 a month, compared to the average $32 fee charged by issuers in 2022.

Political controversy

Democrats designed the CFPB to have political independence by funding it through the Federal Reserve rather than While Democrats argue that the CFPB's independence is crucial to its efficacy, Republicans say the agency's funding source and governing structure make it unaccountable to the public and encourage regulatory overreach.

Since its founding, the CFPB has faced legal challenges from Republicans and the banking industry, who've taken issue with a slew of agency policies, including those regulating credit card late fees and those making it easier for consumers to switch between banks.

In May 2024, the Supreme Court rejected a constitutional challenge to the agency's funding structure, reversing a lower court decision in a 7-2 ruling. The high court's decision — authored by Justice Clarence Thomas, a conservative — has bolstered the agency but likely won't shield it from ongoing criticism and legal attacks.

Not everything the agency does has courted controversy. Recently, the agency won praise from Republicans for a new rule that would allow consumers to have more control over how their financial data is used by banks and other financial firms.

• Meredith Whitney expects home prices to fall by 10% to 20% as the frozen housing market starts thawing.
• The veteran researcher said baby boomers aren't selling, restricting the number of homes available.
• Prices rose in September but existing-home sales fell and the share of first-time buyers remained low.

Home prices are poised to fall by up to a fifth as the frozen housing market thaws — and that could help baby boomers sell at last and younger people to become homeowners, Meredith Whitney says.

"It's got to be a two-step process," the CEO of Meredith Whitney Advisory Group told the Financial Sense Newshour podcast in an episode released Saturday.

"You have to have rates come down, but you also have to have home prices come down," she said about revitalizing the housing market. "One doesn't work on its own."

Homebuyer headaches

Housing transactions have stagnated in recent years as soaring prices and steeper mortgage interest rates have fueled an affordability crisis.

Homeowners who locked in cheap mortgages are reluctant to sell and give them up. Prospective buyers are similarly unwilling to pay top dollar for a worse house than they imagined and take on a larger monthly mortgage payment.

Some relief has come from the Federal Reserve cutting its benchmark rate by 75 basis points since September to as low as 4.5%. The central bank raised the rate from virtually zero to as high as 5.5% between March 2022 and July 2023.

Even so, the median existing-home price jumped 3% to $404,500 in the 12 months to September, per the latest National Association of Realtors data.

Existing-home sales fell 3.5% over the same period, and first-time buyers were responsible for 26% of sales in September, in line with lows hit in August this year and November 2021.

Price declines and baby boomers

Whitney was dubbed the "Oracle of Wall Street" after correctly predicting the 2008 financial crisis, which was precipitated by the collapse of a massive housing bubble.

She predicted house prices would fall by 10% to 20% from here, and urged the government to "sit back and let that happen" because that would only lower them to 2020 or 2021 levels. Homeowners would likely despair a sharp drop in the value of their homes, but many have built huge amounts of home equity over time, she said.

As for why younger millennials and Gen Z are struggling to get on the housing ladder, Whitney pointed to homeowners in their sixties and seventies staying put.

"The problem is the baby boomers own 60% of the housing stock," she said, referring to single-family, owner-occupied homes. "They're not moving."

"The older people aren't selling; they have no place to go," she continued, adding that they "can't afford to move." She highlighted increases in property taxes, homeowners' insurance, and homeowners' association fees as one source of financial strain, especially for those on fixed incomes.

Whitney described the situation as a "generational schism" in a CNBC interview last week and warned there will be a "real standoff between sellers and buyers" until more inventory becomes available.

Several economists have predicted a "silver tsunami" as baby boomers sell their homes to downsize or move into care homes, increasing the available supply of single-family homes and reducing prices.

However, a recent survey found that 54% of older Americans intend to remain in their current homes for life, while only 15% said they planned to sell in the next five years.