The Federal Reserve lowered interest rates by a quarter-point at its Dec. 18 meeting.

The Fed's 25-basis point cut marked the third consecutive such move for the key interest rate, which impacts borrowing costs for credit cards, loans, auto financing and mortgages.

"Recenter indicators suggest that economic activity has continued to expand at a solid pace," the Federal Open Market Committee (FOMC) said in a statement about the rate cut. "Since earlier in the year, labor market conditions have generally eased, and the unemployment rate has moved up but remains low. Inflation has made progress toward the Committee's two percent objective but remains somewhat elevated."

FOMC noted it aims to achieve maximum employment and 2% inflation over the longer run. The committee assessed that the risks to achieving these employment and inflation goals are "roughly in balance."

"The economic outlook is uncertain, and the Committee is attentive to the risks to both sides of the its dual mandate," according to FOMC.

Federal Reserve Chair Jerome Powell said the economy is strong overall and has made significant progress toward its goals over the past two years.

"With today's action, we have lowered our policy rate by a full percentage from its peak, and our policy stance is now significantly less restrictive," said Powell. "We can therefore be more cautious as we consider further adjustments to our policy rate."

And while the rate cut was expected and welcome news, that last part caught the eye of investors and roiled markets.

The Fed now projects just two quarter-point rate cuts in 2025, down from the previous estimate of four.

"We know that reducing policy restraint too fast or too much could hinder progress on inflation. At the same time, reducing policy restraint too slowly or too little could unduly weaken economic activity employment," said Powell, noting the factors that must be taken into account. "In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee will assess incoming data, the evolving outlook, and the balance of risks. We are not on any preset course."

Powell also noted that while inflation is closer to the Fed's goals, Americans are still feeling it in their wallets.

"What I think people are feeling right now is the effect of high prices, not high inflation. So, we understand very well that prices went up by a great deal and people really feel that," Powell explained. "And it's prices of food and transportation and heating your home and things like that. So, there's tremendous pain in that burst of inflation that was very global. This was everywhere in all the advanced economies at the same time. So now inflation itself is way down, but people are still feeling high prices, and that is really what people are feeling."

Then, of course, there is the reality of a new presidential administration coming into office next month.

Powell was asked whether the Committee had begun taking potential policies and actions by President-elect Donald Trump into account - noting that some members have, some have not and some have not said whether they had.

"Some people did take a very preliminary step and start to incorporate, you know, highly conditional estimates of economic effects of policies into their forecast at this meeting and said so in the meeting," said Powell. "Some people said they didn't do so, and some people didn't say whether they did or not. So, we have people taking a bunch of different approaches to that. But some did identify policy uncertainty as one of the reasons for their writing down more uncertainty around inflation. And the point about uncertainty is it's kind of common sense thinking that when the path is uncertain you go a little bit slower. It's not unlike driving on a foggy night or walking into a dark room full of furniture. You just slow down."

"We just don't know very much at all about the actual policies - we don't know how much will be tariffed, from which countries," Powell added. "We don't know if there will be retaliatory tariffs."