Page 8 - Policy Economic Report - December 2025

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

By sector, growth was driven by another solid expansion in financial services activity, but sectors including
healthcare and consumer services also saw improvements that helped to support the upturn and
manufacturing continued to expand at a modest pace.

By region, rates of growth softened for both developed and emerging markets, led by the US and India
respectively. That said, developed markets continued to record a solid rise in output as compared to a
more modest expansion for emerging markets.

Figure 3: Global economic growth & PMI

Source- S&P Global

2. Federal Reserve cuts interest rates 0.25% and increases growth projections for 2026
The Federal Reserve (Fed) lowered its target federal funds interest rate by 0.25%, setting the new range
at 3.50%-3.75%, its lowest level in three years. The figure marks a significant drop from a recent peak
attained in 2023, but borrowing costs remain well above a 0% rate established at the outset of the COVID-
19 pandemic.

Economic growth and inflation forecasts for 2026 improved, supporting a constructive market outlook.
The Fed previously cut rates 1% in 2024’s second half and 0.75% in 2025’s second half.

The unemployment rate ticked up from 4.3% to 4.4% in September, US Labor Department figures showed
in a delayed report released last month. Cutting interest rates is aimed at stimulating the job market by
creating lower borrowing costs for businesses.

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