Divided Fed and Data Discrepancies Cloud Prospects for December Rate Reduction
- The U.S. Federal Reserve faces pressure to cut rates in December amid stable inflation (2.7%) and cooling labor markets, despite internal divisions and data gaps from the government shutdown. - FOMC dissenters oppose cuts, with officials like Jeff Schmid against reductions and Stephen Miran advocating a 50-basis-point cut, complicating market expectations. - Delayed economic data, including October nonfarm payrolls, and global factors like China's stimulus and Latin American slowdowns, heighten uncertain
The U.S. Federal Reserve is under growing pressure to lower interest rates in December, as market sentiment increasingly anticipates such a move—even though policymakers remain divided and recent government shutdowns have caused data delays. With inflation appearing to stabilize and the job market showing signs of cooling, many analysts believe the central bank now has sufficient grounds to begin another round of rate reductions, despite officials’ ongoing caution about possible risks.
Recent consumer price index (CPI) figures
The uncertainty is heightened by delays in key economic reports caused by the government shutdown.
International developments are also influencing the outlook.
The Federal Reserve’s upcoming decision will depend on whether the recent easing of inflation and labor market weakness outweigh ongoing risks like stubbornly high services inflation and global instability. Although a December rate cut is becoming more probable,
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