The BareStory
The U.S. Federal Reserve is set to hold its final policy meeting of 2025 this week, with a decision on interest rates expected by December 10. A third interest rate cut for the year is widely anticipated, following previous reductions in September and October. This potential move marks a continued shift from the aggressive rate hikes that took place in 2022 and 2023. Should the cut occur, it is expected to bring the federal funds rate to a range of 3.50% to 3.75%.
The decision is being closely watched for its potential effect on mortgage rates, which have seen a gradual decline throughout 2025. On December 8, data attributed to Zillow showed the average 30-year fixed mortgage rate at 5.99%. It was noted that mortgage lenders may have already lowered their rates in anticipation of the central bank's action, as mortgage rates reportedly fell to three-year lows in September and October ahead of the Fed's formal announcements.
Conversely, consumers with credit card debt are not expected to receive significant or immediate relief. Americans hold what one summary described as a record $1.23 trillion in credit card debt, with average interest rates reported to be over 22%. It was noted that while credit card rates are variable, issuers are historically slow to lower them following Fed cuts and are not legally required to pass on the full savings to customers.
Uncertainty remains regarding the exact market response. Lenders' actions do not always directly mirror the Federal Reserve’s decisions, and some analyses suggest waiting for the announcement could be a costly mistake for borrowers. The post-meeting comments from Federal Reserve Chairman Jerome Powell regarding the outlook for 2026 are also expected to influence rate movements.
How it may affect me
As a U.S. reader:
• The expected rate cut could contribute to lower mortgage rates, which have already seen a decline, potentially reducing borrowing costs for new homebuyers.
• Those with credit card debt may not see significant or immediate relief, as issuers are historically slow to pass on rate cuts to customers.
• The exact impact on consumer borrowing costs is uncertain, as lenders’ actions do not always directly mirror the Federal Reserve's official decisions.
