The Federal Reserve cut interest rates three times in 2025, in September, October, and December, bringing them to approximately 3.5% to 3.75%, the lowest level in nearly three years. US nonfarm payroll growth averaged just 49,000 jobs per month, while the economy needs roughly 100,000 to keep pace with population growth, making 2025 the weakest year for job creation since 2020. Unemployment reached 4.3% to 4.4% by late 2025, the highest level in four years. Fed Chair Jerome Powell acknowledged that official job statistics likely overstated actual growth by approximately 60,000 jobs per month. Core Personal Consumption Expenditures inflation remained around 2.9%, well above the Fed’s 2% target, yet the central bank chose to prioritize employment in its dual mandate.
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