In a single year the Fed has gone from peak post‑Covid rates to a clear easing cycle. December's third 2025 rate cut pushes the federal funds range down to 3.5–3.75% and flips the switch on a new operating regime built around full‑allotment repos and steady Treasury bill buying.
This isn't a sleepy mid‑cycle tweak. The job market is softening, inflation is still above target, and President Trump is openly demanding deeper cuts while trying to remake the Fed's board. The fight now is over how far and how fast rates fall—and whether the central bank can stay independent while doing it.
13 events
Latest: December 11th, 2025 · 5 months ago
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December 2025
New York Fed removes repo cap, makes facility full‑allotment
LatestOperational
Effective December 11, the New York Fed’s Desk drops the aggregate limit on standing overnight repos, moving to full allotment at the policy rate—turning the facility into an unlimited liquidity backstop.
Third 2025 cut and new operating regime unveiled
Policy Decision
The Fed cuts rates to 3.50–3.75% in a split vote and issues an Implementation Note that lowers reserve interest to 3.65%, restarts ongoing T‑bill purchases, and solidifies its ample‑reserves framework.
Dot plot reveals deep division over 2026 path
Forecast
New Fed projections show a median call for just one 2026 cut, but a wide range from no further easing to possible hikes, underlining how unsettled the outlook is as Powell’s term nears its end.
Quantitative tightening stops; reinvestment into T‑bills begins
Operational
With QT halted, the Fed starts rolling all maturing Treasuries and agency principal back into Treasuries, tilting increasingly toward Treasury bills to keep reserves “ample.”
October 2025
Second cut and QT’s end: Fed moves to 3.75–4.00%
Policy Decision
The FOMC trims another 25 basis points and announces its balance‑sheet runoff will end December 1, with future Treasury and agency proceeds fully reinvested into government securities.
Supreme Court lets Cook stay through at least year‑end
Legal
The Supreme Court allows Cook to keep her Fed seat pending a full hearing in January 2026, ensuring she can vote on the October and December cuts.
September 2025
First 2025 cut: rates down to 4.00–4.25% as jobs weaken
Policy Decision
Citing slower job gains and still‑elevated inflation, the Fed cuts 25 basis points. New Governor Stephen Miran dissents in favor of a half‑point move, while projections pencil in two more cuts this year.
Judge blocks Cook firing; Trump appeals up the chain
Legal
A federal judge grants Cook a preliminary injunction keeping her on the Board. The Justice Department rushes appeals, and the case edges toward the Supreme Court.
August 2025
Lisa Cook sues Trump over attempted firing
Legal
Fed Governor Lisa Cook files suit arguing Trump’s move to fire her over disputed mortgage allegations violates the Fed’s “for cause” protections and threatens its independence.
July 2025
Fed holds again; internal hawks want to start cutting
Policy Decision
The FOMC keeps rates at 4.25–4.50% but Governors Bowman and Waller dissent in favor of a quarter‑point cut, foreshadowing the pivot to easing.
June 2025
Trump demands 100‑bp cut despite upbeat jobs report
Political Pressure
Trump publicly urges Powell to slash rates by a full percentage point, reinforcing a months‑long pressure campaign that many economists say threatens Fed independence.
January 2025
Fed freezes at 4.25–4.50% as risks look balanced
Policy Decision
The FOMC keeps rates unchanged and calls inflation “somewhat elevated” but sees risks to jobs and prices as roughly in balance, setting up a long holding pattern.
December 2024
Fed ends hiking era with first trim to 4.25–4.50%
Policy Decision
After holding the line at post‑Covid highs, the FOMC delivers a 25‑basis‑point cut and signals that future easing will proceed cautiously as inflation, while easing, remains above target.
Historical Context
3 moments from history that rhyme with this story — and how they unfolded.
1 of 3
2019
2019 Fed ‘Mid‑Cycle Adjustment’ and Repo Market Turmoil
In 2019 the Fed cut rates three times by 25 basis points while calling the moves a “mid‑cycle adjustment,” not a full easing campaign. Soon after, it faced a spike in repo rates and quietly began buying T‑bills to rebuild reserves, all under intense criticism from President Trump for not cutting faster.
Then
The economy avoided recession, but markets were confused by mixed messaging on whether this was easing or just insurance.
Now
The episode previewed today’s ample‑reserves regime and showed how quickly money‑market plumbing can force balance‑sheet changes.
Why this matters now
It offers a close precedent for today’s combo of small cuts, T‑bill purchases, repo tweaks, and loud White House pressure.
2 of 3
1994–1996
1995 Soft‑Landing Easing Under Alan Greenspan
After a sharp 1994 hiking cycle, the Fed trimmed rates three times in 1995 as inflation stayed contained but growth slowed. The goal was to prevent a policy‑induced recession without re‑igniting inflation, using small, data‑driven moves rather than a full‑blown stimulus.
Then
The economy re‑accelerated, and the U.S. enjoyed several more years of expansion without a surge in inflation.
Now
1995 became the textbook example of a ‘soft landing’ engineered through modest, timely easing.
Why this matters now
This is the optimistic template Powell’s Fed is trying to follow: modest cuts, steady hand, no panic.
3 of 3
1969–1974
1970s Pressure on Fed Chair Arthur Burns Under President Nixon
Facing reelection, Nixon leaned on Fed Chair Arthur Burns to keep money easy, privately berating him and publicly hinting at consequences. The Fed held rates too low for too long as inflation pressures built, contributing to the stagflation that defined the decade.
Then
Unemployment dipped and growth held up briefly, helping Nixon politically.
Now
The episode badly damaged the Fed’s credibility and forced much harsher tightening later under Paul Volcker.
Why this matters now
It’s the cautionary tale behind today’s anxiety that Trump’s campaign against the Fed could end with higher inflation and a harsher cleanup job later.
