Federal Reserve Decision and Q4 2025 Bank Results
On January 28, the Federal Open Market Committee (FOMC) of the Federal Reserve (Fed) voted, by a majority, to keep the federal funds rate unchanged within the range of 3.50-3.75 percent.
Key Points from the FOMC Decision
- The labor market progress remains modest, though the unemployment rate has shown signs of stabilization.
- Inflation remains elevated, as observed previously.
- Ten FOMC members voted in favor of the decision, while Stephen I. Miran and Christopher J. Waller advocated for a 25 basis points reduction in the federal funds rate, placing it between 3.25-3.50 percent.
Inflation Data
The Personal Consumption Expenditure (PCE) inflation for November 2025 was at 2.8%, while the Consumer Price Index (CPI) for December reached 2.7%.
The Fed’s target is a 2% inflation rate. The Fed projects reaching this goal by 2028 and estimates a 2.4% inflation rate for 2026 (based on December projections). The current real interest rate ex-ante stands at 0.85%-1.1%, aligning with the estimated range of the US real neutral rate.
Implications for Interest Rates
Given the modest labor market progress and persistent inflation, it is unlikely that the Fed will lower the federal funds rate in 2026 unless influenced by political pressures or more accommodative stances from FOMC members.
Q4 2025 Earnings of Major US Banks
Despite the decrease in the federal funds rate between September and December 2025, major US banks reported positive results in Q4 2025:
Total Revenues
- JPMorgan Chase & Co. (JPM): US$45,798 million (+7.1% a/a)
- Citigroup Inc. (C): US$19,871 million (+2.1% a/a)
- Bank of America Corporation (BAC): US$28,367 million (+7.1% a/a)
- Wells Fargo & Company (WFC): US$21,292 million (+4.5% a/a)
Quarterly Net Interest Margins
- JPMorgan Chase & Co. (JPM): US$24,995 million (+7.0% a/a)
- Citigroup Inc. (C): US$15,665 million (+14.1% a/a)
- Bank of America Corporation (BAC): US$15,750 million (+9.7% a/a)
- Wells Fargo & Company (WFC): US$12,331 million (+4.2% a/a)
Net Income
- JPMorgan Chase & Co. (JPM): US$13,025 million (-7.0% a/a)
- Bank of America Corporation (BAC): US$7,319 million (+11.9% a/a)
- Wells Fargo & Company (WFC): US$5,361 million (+5.6% a/a)
The banks’ performance in total revenues and net interest margins was generally positive, indicating strong resilience in the banking business. However, variations in net income are attributed to differing results across other business divisions such as corporate and commercial banking, market operations, and credit provision adjustments.
It is crucial to assess not only the effects of interest rates (active and passive) on net interest margins but also events in non-traditional banking services markets.
Key Questions and Answers
- What was the FOMC’s decision on January 28? The Federal Open Market Committee (FOMC) of the Federal Reserve decided to keep the federal funds rate unchanged within the range of 3.50-3.75 percent.
- What are the current inflation rates? The PCE inflation for November 2025 was at 2.8%, and the CPI for December reached 2.7%.
- How did major US banks perform in Q4 2025? Major US banks reported positive results in total revenues, net interest margins, and net income for Q4 2025.
