Fed dropped the rates but also did something from old playbook, printing 40 billion a month in QE

Buying Florida · Dec 18, 2025 · 6m

If the **Federal Reserve cuts interest rates by 0.25% and simultaneously restarts a form of quantitative easing (QE) by buying about $40 billion per month of securities, the overall monetary policy stance becomes very accommodative. Here’s what that generally means for interest rates and the broader economy:

📉 1. Short-Term Interest Rates

The Fed’s benchmark rate (federal funds rate) directly sets the cost of overnight borrowing between banks. A 0.25% cut lowers that rate, which usually leads to lower short-term borrowing costs throughout the economy — for example on credit cards…