• 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 of the world's power brokers gathered for a New York Times DealBook Summit on Wednesday.
• While Elon Musk was not in attendance, he was the most-talked-about person there.
• Here's what business leaders and politicians had to say about the richest person on Earth.

Several masters of the universe convened on Wednesday, and they had one name on their lips: Elon Musk.

At the annual New York Times DealBook Summit, the world's richest man was a topic of conversation among his fellow billionaires, CEOs, and political elite.

To be sure, Andrew Ross Sorkin, DealBook's founder and the day's MC, asked nearly all of his guests about Musk, who made headlines at the same summit last year for telling advertisers on X to "go fuck" themselves.

And while the Tesla CEO wasn't present this year, many conversations touched on his latest role. Over the past couple of months, Musk has become a political advisor and confidant to President-elect Donald Trump and one of his biggest donors, shelling out about $119 million to support his campaign.

The reaction to Musk's new role as co-leader of the Department of Government Efficiency ranged from cautiously optimistic to not giving a damn.

Ken Griffin, the billionaire hedge fund manager and GOP donor, praised Musk's entrepreneurial ability.

"He runs Tesla, he runs SpaceX at a level of excellence that very few companies can even start to relate to," Griffin said.

At the same time, he questioned just how much Musk could impact federal spending.

"He's going to have to hit the hard reality, the hard truth, that making cuts of any form whatsoever will be politically very unpopular," Griffin said. "It'll be very hard to squeeze numbers in the trillions of dollars out of the baseline budget."

OpenAI CEO Sam Altman, who has been embroiled in a personal and legal feud with Musk, similarly praised the Tesla CEO's business acumen.

"At a time when most of the world was not thinking very ambitiously, he pushed a lot of people, me included, to think much more ambitiously," Altman said of his OpenAI cofounder.

While Altman acknowledged his feelings about Musk have changed, he said it would be unlike his former "mega hero" to use his political proximity for his own monetary gain.

"It would be profoundly un-American to use political power, to the degree that Elon has it, to hurt your competitors and advantage your own businesses," Altman said. "It would go so deeply against the values I believe he holds very dear to himself."

Jeff Bezos, whose Blue Origin is in direct competition with Musk's SpaceX, agreed that Musk's relationship with Trump was not that concerning.

"I take it face value what has been said, which is that he is not going to use his political power to advantage his own companies or to disadvantage his competitors," Bezos said. "Let's go into it hoping that the statements that have been made are correct, that this is going to be done above board in the public interest."

And Sundar Pichai, the Alphabet CEO, said Musk's xAI artificial intelligence company is a formidable competitor "given Elon's track record."

Those interviewed with actual political experience — Federal Reserve Chair Jerome Powell and former President Bill Clinton — appeared the most unfazed by Musk's new position of power.

Powell seemed confident in the independence of the Fed, even though Musk has signaled support for moving the central bank under the president's command.

And Clinton seemed to almost entirely brush off Musk's burgeoning influence — including the fact that he was on a phone call between Trump and Ukrainian President Volodymyr Zelenskyy.

"Trump's whole shtick is that all these rules and systems don't amount to anything," the former president said.

"Being the richest guy on Earth is far more important than anything else that you could be to him," Clinton added. "That's what he values. It's no big deal."