Key Takeaways

• On 12 December 2025, the financial market press review highlights the Federal Reserve’s decision to cut rates by 25 basis points, with projections signaling fewer future cuts than previously anticipated.
• Diverging central bank strategies, mixed equity market movements, and changing trader expectations define today’s coverage.
• Top story: The Fed lowers rates by 25 basis points as the dot plot points to a slower pace of further cuts.
• S&P futures retreat 0.5% premarket, suggesting profit-taking after the recent Fed-driven rally.
• The Swiss National Bank keeps its key rate unchanged at 0%, taking a different approach from the Fed.
• Oracle shares gain on increased capital expenditure plans, despite mixed quarterly earnings.
• Market sentiment reflects growing caution as monetary policies diverge, emphasizing the need for disciplined analysis.

Introduction

On 12 December 2025, the financial market press review focuses on the Federal Reserve’s decision to lower rates by 25 basis points amid signals for a slower pace of future reductions. This move comes as the Swiss National Bank maintains its rate at 0%, highlighting divergent policy paths and reinforcing caution in markets shaped by shifting expectations.

Top Story

Fed Delivers First Rate Cut of 2025

The Federal Reserve reduced its benchmark interest rate by 25 basis points to 4.75%. This marked the first cut in the current easing cycle. Chair Jerome Powell cited moderating inflation and concerns over labor market conditions as the primary factors behind the decision.

This move was largely anticipated following November’s inflation data, which showed core CPI declining to 2.3% year-over-year, moving closer to the Fed’s 2% target. Additionally, the labor market has shown signs of softening, with unemployment rising for three consecutive months to 4.2% in November.

Chair Powell emphasized a cautious approach to further policy changes, stating the Fed will remain “data-dependent rather than calendar-dependent.” Markets are now pricing in three additional 25-basis-point cuts through mid-2026, though Powell did not confirm any specific timeline.

The FOMC statement removed its previous reference to “greater confidence” in inflation returning to target. Instead, it noted that “progress has been made” on price stability. Committee projections point to a median federal funds rate of 4.1% by the end of 2026.

Also Today

Central Bank Policy

Bank of England Holds Rates

The Bank of England maintained its Bank Rate at 4.25% in a 6-3 vote, with the minority favoring a 25-basis-point cut. Governor Andrew Bailey cited persistent services sector inflation as a key reason for holding off on immediate easing.

Recent UK data showed headline inflation at 2.3%, in line with the Bank’s target, but services inflation remained elevated at 4.5%. As a result, markets have shifted expectations, now anticipating the first rate cut in February 2026 instead of January. The pound strengthened 0.7% against the dollar on this news, reaching $1.264.

ECB Signals January Easing

The European Central Bank signaled a likely rate cut in January. President Christine Lagarde described incoming data as “encouraging” regarding disinflation. The ECB kept its main rate at 3.5%, as anticipated.

Eurozone inflation dropped to 1.9% in November, falling below the ECB’s 2% target for the first time since early 2023. Core inflation also eased, dropping to 2.6% from 2.9% in October.

Following these remarks, the euro weakened 0.5% against the dollar. European sovereign bond yields declined broadly. Germany’s 10-year Bund yield was down 7 basis points to 2.12%.

Equity Markets

Tech Giants React to AI Regulatory Approval

Microsoft shares rose 3.2% following European Union approval of its expanded partnership with Anthropic, clearing a critical hurdle for the $1.5 billion investment. The agreement includes transparent AI safety protocols, addressing competition concerns.

In contrast, Alphabet fell 1.7% as analysts view the Microsoft-Anthropic approval as reinforcing competition to Google’s Gemini AI system. Alphabet is awaiting a UK regulatory decision on its DeepMind acquisition, expected by 15 January 2026.

Industry observers note a shift in regulatory approach, with authorities prioritizing operational safeguards rather than blocking deals. Technology policy analyst Maria Chen from the Brookings Institute stated that regulators are building frameworks enabling innovation while managing potential risks.

Energy Stocks Slide on OPEC+ Production Increase

The energy sector declined 2.3% after OPEC+ announced a gradual production increase of 500,000 barrels per day starting February 2026. Shares of ExxonMobil and Chevron fell 2.8% and 3.1% respectively.

Saudi Arabia’s energy minister commented that the move reflects “confidence in sustained global demand growth.” This decision partially reverses the production cuts implemented in early 2024.

Oil prices fell sharply, with WTI crude down 4.2% to $72.40 per barrel and Brent down 3.9% to $76.15. The larger-than-expected increase surprised analysts who had forecast a more cautious approach.

Market Wrap

Indices Close Mixed on Fed Decision Day

Major US indices finished mixed after the Fed’s rate announcement. The Dow Jones Industrial Average rose 0.7% to 43,125, and the S&P 500 gained 0.3% to close at 5,892. Meanwhile, the Nasdaq Composite slipped 0.4% to 18,456, led lower by several high-growth tech stocks.

European markets closed higher ahead of the Fed’s move, with the Stoxx Europe 600 up 0.8%. In Asia, Japan’s Nikkei 225 added 0.2%, while China’s Shanghai Composite lost 0.3%.

Sector performance varied significantly. Financial stocks gained 1.8% on improved lending margin expectations, while utilities and consumer staples also outperformed, rising 1.5% and 1.2% respectively. Energy and communication services lagged, down 2.3% and 0.9%.

Bond markets rallied. The US 10-year Treasury yield declined 7 basis points to 3.82%, and the 2-year yield dropped 9 basis points to 3.91%. The dollar index weakened 0.6% to 102.4, its lowest since September.

What to Watch

• US November retail sales report on 15 December 2025
• Bank of Japan monetary policy decision on 18 December 2025
• Nike quarterly earnings release on 19 December 2025
• US PCE Price Index for November on 20 December 2025
• German Ifo Business Climate Index on 22 December 2025
• US durable goods orders for November on 23 December 2025
• Market holiday for Christmas on 25 December 2025
• US weekly jobless claims report on 26 December 2025

Conclusion

The Federal Reserve’s rate cut signals a more measured approach to monetary policy, with updated forecasts suggesting fewer reductions in the near term. Divergent strategies from the Swiss National Bank and Bank of England underscore the complexity of global economic conditions. Looking ahead, confirmation from upcoming US retail sales and PCE data, along with the Bank of Japan’s policy decision, will be closely monitored by markets.

disciplined analysis and measured reactions remain critical as traders navigate diverging central bank strategies and shifting expectations. To deepen your understanding of how discipline and mindset influence outcomes in today’s markets, explore the foundational principles in trading strategies and stay agile as global economic conditions continue to evolve.