The FOMC Meets Again: Is Another Rate Cut About to Shake the Markets?

The Federal Open Market Committee is preparing for its final meeting of the year, and investors worldwide are watching closely. A growing number of traders expect the committee to deliver a third consecutive cut to the federal funds rate, a move that would bring the benchmark to its lowest level in almost three years.

The rate currently sits within a range of 3.75% to 4.00% after two reductions of 25 basis points in September and October. Market data shows that nearly 90% of interest rate traders anticipate another similar cut during the meeting scheduled for Tuesday and Wednesday. If that happens, the rate would fall to between 3.50% and 3.75%, a level last seen in September 2022.

Economists have also signalled that they expect a further reduction. Comerica Bank‘s chief economist, Bill Adams, noted that the institution forecasts a quarter-point cut at this week’s meeting. He also suggested that some committee members are likely to disagree with the decision, adding that the Federal Reserve may avoid offering clear guidance on interest rate expectations for 2026 due to differing views within the group.

Although the federal funds rate is simply the rate at which banks lend to one another, its influence on the broader economy is considerable. Changes to this rate affect the prime rate, which in turn influences the cost of credit cards, car loans, home equity products and personal loans. These consumer rates do not match the federal funds rate exactly, but they tend to follow the same direction.

Lower rates generally mean cheaper borrowing for businesses. When companies face lower financing costs, they often invest more in expansion, hiring and development. This can feed into stronger corporate performance and support gains in the stock market. Growth and technology stocks, which typically rely heavily on borrowing and future earnings, tend to react most strongly to shifts in interest rate policy.

For everyday consumers and investors, the outcome of this weeks meeting may shape borrowing costs and market movements heading into the new year. With economic signals still mixed and committee members holding different views, the decision carries significant weight for financial markets.

The FOMCs final rate announcement of the year is expected on Wednesday at 2 p.m. Eastern Time (3:00 a.m. on Thursday in Malaysia), a moment that is likely to attract global attention from policymakers, traders and consumers alike.