Overview
- On Dec. 10, the Federal Reserve cut rates by 0.25 percentage point to 3.50%–3.75% in a 9–3 vote and signaled that any further moves will depend on incoming data and risks.
- Early estimates now peg the 2027 cost‑of‑living adjustment at roughly 2.3%–2.6%, and a 2.3% increase would be the smallest since 2020.
- The Fed’s decision does not directly set benefits, as Social Security adjustments are calculated from the CPI‑W rather than monetary policy.
- Policymakers acted with delayed government data and leaned on outside sources such as ADP, adding uncertainty to near‑term inflation readings.
- Retirees face mixed effects from the shift, with potential relief from cooling prices but lower yields on savings and bonds and benefits that have lost about 20% of buying power since 2010.